The wait time for a new home in southern Western Australia has risen to more than a year as supply chain issues, material costs and increased demand cripple the industry.
- WA builders struggle to cope with increased demand and inflated material costs
- Pressures are felt harder in the WA region with rising transport costs and wait times
- Master Builders Association WA says pressure is felt across the state
Since the start of the pandemic, builders have reported increasing stress and cost pressures with the collapse of several businesses in Western Australia.
Pindan Construction of Perth entered external administration in May 2021 and Schlager Homes, based in Albany, entered liquidation the following month.
More than a year later, the pressure is still being felt, particularly in the AO region.
Albany-based Ryde Building Company chief operating officer Iian Woods said project completion times have dropped from 24 weeks in a normal year to 60 weeks in 2022.
“Certainly we’re noticing that this year…as we finish work, our margins are much lower than we would have preferred,” he said.
“We had to make a few changes to help with the workload and make sure things flow a little smoother, but it’s been very difficult managing the trades and the supply chain, that’s for sure.”
Subsidies ‘completely overheated the market’
In 2020, state and federal governments began offering stimulus grants to first-time homebuyers designed to keep the construction industry afloat during the pandemic, with eligible applicants being offered up to $45,000 to to build.
Mr Woods said the increased workload was significantly increasing the pressure on builders facing supply chain delays and rising material costs.
He said customers showed empathy, understanding that the issues were largely beyond his control.
“Most customers are pretty good, but we’ve had some unhappy people and that’s understandable.
“But it’s not the manufacturer’s fault, it’s the result of government subsidies and people wanting to get their hands on $45,000.
“I understand why [the governments] did, but they completely overheated the market…maybe they should have worked more closely with the industry rather than just jumping in and doing what they did.”
He said the problem was magnified for regional builders who also faced inflated transport costs and wait times.
“In addition to the increased material costs, we also have additional transportation costs as the freight companies, obviously the cost of fuel, have gone up, they have to cover their margins as well.”
Regional builders face additional challenges
According to Master Builders Association WA (MBAWA), the added stress is felt across the state.
“Builders continue to experience trade and skill shortages, as well as significant price increases that are still being felt due to the COVID-19 pandemic,” an MBAWA spokesperson said.
“These price increases along with commercial labor rates and building materials, along with material delays have put more pressure on builders with costs and cash flow…in many circumstances, they cannot be passed on, and for the housing sector, these progress payments are vital to maintaining a positive cash flow.”
The association agreed that rural builders face additional pressure.
“Across the WA region, significant challenges remain with a severe lack of diverse and affordable housing… compounding challenges related to labor shortages and skills shortages.
“Similarly, the cost of transport/transportation, fuel and other associated costs has seen a drastic adoption of regional indexing of construction costs.”