Bold move to kickstart VIC’s ailing construction sector. Picture: Supplied
Melbourne home builders are offering discount home loans and prices not seen since before the pandemic in a move to kickstart Victoria’s ailing construction sector.
But while offers have ballooned in the past month, the builders have issued a stark warning that housing costs will rise within the year.
While the Victorian government’s big build projects continue to drive up the cost of trades like electricians and plumbers, some of the state’s biggest builders are reworking home designs and scrapping luxury fixtures in a back-to-basics bid to bring housing construction prices under $200,000 — less than half the state’s $505,000 average build cost.
Metricon’s building operations general manager Peter Temopoulos said while most material costs had been fairly steady in the past year, and timber frames were “back to historic levels”, there were some outliers.
“Right now we are still seeing pressure with plumbing and electrical trades,” Mr Temopoulos said.
For these trades, he said housing construction was competing with the state’s big build projects, making wage escalation hard to avoid.
He added that minimum seven-star energy efficiency standards had also added about $15,000-$20,000 to the cost of most house builds in the past year.
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One of the home designs being discounted by Metricon.
Despite this, the builder is currently offering a first-home buyer-centric build with a $183,000 price tag, while discounting other designs by anywhere from $20,000-$60,000.
“If that’s not cheaper than a few years ago, it will certainly be on par,” Mr Temopoulos said.
However, he said this would not last.
“Come next year, houses will be more expensive in our industry, so the time is now,” he said.
Sherridon Homes are currently offering home builds at $169,700, with a goal to get house and land packages down as low as $500,000.
ABH Group chief executive Pasquale Garofalo said as the industry had come down from a Covid high that tested its limits and drove up prices, less hectic conditions today had allowed them to find better efficiencies to reduce prices.
“It took a lot of looking at our suppliers and that needed to level off a bit (after Covid), but now you can talk to the supply chain more easily,” Mr Garofalo said.
“It would have been very difficult previously to get everyone aligned as we have, and it wouldn’t have been anywhere near this level had we tried it sooner.
ABH Group chief executive Pasquale Garofalo.
The Essence range homes being offered by Sherridon Homes at prices less than half Victoria’s more than $500,000 average build cost.
Home design revisions for the Sherridon Homes properties under the Essence banner included making them slightly smaller, looking at wall and roof designs, and offering basic builds with laminate surfaces in place of more expensive stone ones.
“It’s a bit back to the 80s,” Mr Garofalo said.
The redesign also sets the builds up for more use of modular building materials, meaning that they could potentially become more affordable in time.
Mr Garofalo said this was their lowest priced offering since before the pandemic, but had only been available for about four weeks.
Major building group Burbank and YourLand Developments have also just begun to offer a 3.49 per cent variable interest rate via National Pacific Finance — far below the 6.17 per cent standard variable rate today.
It would save borrowers purchasing select designs in specified estates about $24,000 across its two-year timeline on a $750,000 loan — the maximum they will back.
Burbank’s sales and marketing general manager Anthony Garrubba said while it was unlikely building costs or land prices would fall, they believed it was possible to make building new homes more appealing by using a lower mortgage rate.
“The big problem isn’t demand, it really feeds back to serviceability,” Mr Garrubba said.
“This is the cheapest home loan rate in the country … but the nicest part of it, is that it works. We have had a customer take it up within the first nine days of it coming up.”
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