Construction costs soar in Brisbane as the bowser bites, builders say
Construction costs in Brisbane are rising, straining builders and potentially putting pressure on the housing market and state infrastructure pipeline.
Builders say the cost of building a house in south-east Queensland has risen by between $10,000 and $20,000 since the war with Iran began in late February, causing fuel prices to soar.
“It’s absolutely very concerning,” said Andrew Williams of GW Homes, which builds homes in Brisbane.
Inflation was around 1 percent a month before the war, he said, due to pressures from major infrastructure projects, but now it could be between 1.5 percent and 2 percent.
He reported significant increases in some supplies in less than two months; The price of PVC pipes increased by approximately 60 percent, and the price of electrical cables increased by approximately 40 percent.
“It’s not a major component of the building, but if you add it anyway, it becomes cumulative with everything else…it just keeps going on and on and on and on,” Williams said.
He said the recent price increases were due to rising production costs of fossil fuel-intensive materials as well as fuel taxes imposed at every point in the supply chain.
Master Builders Queensland managing director Paul Bidwell said businesses that had signed agreements to deliver work or material for a fixed price were most at risk.
“It really feels like covid all over again,” he said.
“If nothing is done to protect and help builders there will be a new wave of bankruptcies.
“Time will tell how bad it will get.”
While the industry body announced the state government’s intervention this week, some builders were demanding financial hardship payments.
While interest rates are expected to increase further, it is not yet known how Brisbane house prices will be affected by the increase in construction costs.
“The only good thing is that we are in a rising real estate market so far,” Bidwell said.
“And as long as the rise continues, banks have an opportunity to say, ‘We can lend you more.’
“It’s in everyone’s interest to sit down and try to solve this problem because if one of the contractors goes bankrupt or the homeowner goes bankrupt, nobody wins. [is] crippled… there must be a lot of good will.”
Williams added that he thought the situation was not as bad as the Covid-19 outbreak, but high demand did not mean Brisbane would be isolated.
“It’s good that there’s demand for housing, but if you can’t afford to buy or build the house, it doesn’t matter what the demand for housing is, you’re not going to build it,” he said.
The federal government has warned that the conflict could affect the total number of homes built, and experts have also warned that infrastructure development could slow.
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