Small builders and tradespeople who service the renovation and custom home building sector in Australia are cashing as demand has recovered more strongly than expected, new figures suggest.
Releasing its latest report, estimating and job management software company Buildxact said the volume of quotes which were submitted using its platform increased by 31.7 percent from 24,644 in the June quarter to 32,463 in the three months to September.
Whilst much of this increase was attributable to a 21 percent rise in the number of subscribers on Buildxact’s platform, the average volume of quotes for each builder on the platform still increased by 7.7 percent during the third quarter.
Buildxact chief executive officer David Murray said the market has recovered more strongly than expected following a slowdown early in the pandemic.
He says factors such as more time being spent at home and a reallocation of household funds away from travel has driven demand for home renovations, which accounted for a greater portion of jobs won on Buildxact during the third quarter compared with long-term averages.
As well, he says there is strong demand in regional markets amid a movement of people away from metropolitan areas.
Geoff Dahlsen, chief executive officer of building manufacturing and supply company Dahlsens, agrees that there has been an upturn in activity.
Speaking particularly of regional areas, Dahlsen says new housing demand has been strong as greater acceptance of working from home has enabled workers from metropolitan areas to access affordable housing in regional markets.
Whilst many within this group prefer established homes rather new builds, their activity has forced local residents to look for new housing stock.
This is happening not only in large regional centres close to capital cities but across regional areas generally, Dahlsen adds.
The latest report adds further weight to growing evidence that the lower density segment of the residential construction market is holding up reasonably well notwithstanding a significant contraction in multi-storey residential work.
In its latest forecasts, Housing Industry Association (HIA) said it expects the overall number of starts on new detached homes to edge up from 102,000 in 2019/20 to 104,700 in 2020/21.
This will happen even as multi-unit dwelling commencements plummet from 69,000 in 2019/20 to 43,400 in 2020/21.
A resurgence of activity in detached housing is also evident in recent data on new home sales and building approvals.
Meanwhile, HIA says the amount of money being spent on small-scale home renovation projects is up 25 percent compared with this time last year.
HIA Chief Economist Tim Reardon said recently that several factors are driving a resurgence in detached home building.
First, the Commonwealth HomeBuilder program is having a greater impact upon construction of lower density housing and home renovations as tight eligibility timeframes make this program difficult to access for larger multi-unit projects.
Consumer preferences have also shifted toward lower density housing amid concerns about COVID safety in multi-storey apartments.
Finally, migration of students and young workers from regional areas into metropolitan areas for work, study or social activities has been brought to a halt this year.
Asked how builders can maximise their chances of success on jobs for which they bid, Murray said quotes must be well presented and need to be turned around as quickly as possible.
When submitting bids, faster turnaround creates an impression that the builder is serious about the job, he says.
Meanwhile, quotes which are digital and well-presented help to inspire confidence about the builder’s overall level of professionalism.
Murray says software such as Buildxact can reduce the time taken to produce a professional quote from up to a week to a matter of hours.
In one example, a builder won a job involving a pergola and a deck despite originally having forgotten to prepare and submit the quote. After the customer rang, he produced the quote in 25 minutes.
According to Dahlsen, meanwhile, the strength in regional housing demand is placing pressure on supply of land and materials.
Regarding land, he says the pipeline of supply available for residential use is shrinking across many areas as building activity levels outstrip the pace of new land releases.
On materials, Dahlsen talks of a shortage of pine, LVL and fibre cement. This has happened as strong demand has coincided with a scaling back of capacity at the beginning of the pandemic and the effect in Victoria of restrictions upon manufacturing during the second lockdown.
He encourages builders to place their orders early as delivery timeframes may be longer than normal.
“In terms of getting messages out to builders, it’s important that they be organised and that they order materials as far out as they possibly can more so than normal so that we can make sure that we can fulfill those orders,” Dahlsen said.
“People need to give as much notice as they can so that we can allocate the manufacturing for their materials.”