Australia’s housing affordability crisis has reached code red status as runaway construction costs threaten to permanently lock out a generation of potential homeowners.
A new analysis reveals a construction sector in turmoil, with renovation expenses surging a staggering 43 per cent since late 2019 and building material prices remaining stubbornly elevated, sitting 35.4 per cent above pre-pandemic levels.
The crisis, driven by a perfect storm of crippling labour shortages, supply chain disruptions, and soaring prices for essential materials is prompting urgent calls for government intervention to prevent a full-blown housing catastrophe.
Exclusive data by the Housing Industry Association shows essential materials are bleeding budgets dry, with the cost of copper pipes and fittings skyrocketing by 14.4 per cent annually and 63.4 per cent since the end of 2019.
The cost of electrical cable and conduit are equally alarming, jumping 9.5 per cent annually and a shocking 69.7 per cent since the end of 2019.
Even the humble clay brick, a cornerstone of Australian construction, has surged by 8.3 per cent annually and 48.4 per cent since the end of 2019, while timber doors rose by 7.4 per cent annually.
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Source: HIA
Only materials like plywood, steel beams, plastic sanitary ware, reinforcing steel, sheet metal and other electrical equipment saw a reduction in cost between 4 per cent and 9 per cent.
However, it’s a drop in the ocean, considering the cost of skilled labour, which saw a 5.5 per cent increase over the 12 months to March, with those looking to build now paying 35.5 per cent more for a home than they did pre Covid.
To put it in numbers, the average national build cost now is $484,315, according to March figures by the Bureau of Statistics, $18,832 more than the previous year and $152,969 more since pre-Covid in 2020, when the average build cost just $331,346.
Source:HIA
HIA senior economist Tom Devitt said while the numbers looked bleak, the cost of construction material was starting to stabilise.
“Some of the numbers shared do show a few materials are still going up really rapidly…but the average building materials have actually really slowed. They are still very much elevated from five years ago but they do look like they’ve stabilised.
“Labor costs are also still increasing quite rapidly but also not as much as they did three years ago. Our trade report two or three years ago had a single year where trade prices went up 10 per cent.”
Mr Devitt said while the cost of materials would come down with time, the real concern going forward was ongoing labour shortages.
“The demand is still going to be outstripping the supply of trades unless the government follows through on what they’ve been paying lip service to in terms of fast tracking in-demand construction trades,” he said.
“(So far) nothing has really progressed from that because the number of skilled trades that have been arriving, relative to overall overseas arrivals, has been minute.”
The hidden cost behind Australia’s homebuilding struggles
An analysis by NextMinute, a leading project management software for tradies, recently shed light on the occupations with the highest vacancy rates and the most job ad listings across Australia, revealing a stark disparity between supply and demand in the trade sector.
Official figures indicate that motor mechanics, electricians, and welders are among the most sought-after trades, with thousands of vacancies across all Australian states.
However, SEEK job ad volumes suggest the demand is far greater, with listings for electricians alone exceeding six times the official vacancy count.
Similarly, there are 9749 listings for mechanics and 2706 for welders, reflecting widespread recruitment challenges in the industry.
Despite attractive salaries, several trades remain under-represented in global job searches, such as airconditioning and refrigeration mechanics, who earn over $2000 per week.
Occupations with the most job searches. Source: NextMinute
Tradie Ben Collins from Park Lane Carpentry pictured in Maroubra. Picture: Sam Ruttyn
The United Kingdom leads overseas demand, with UK-based workers conducting thousands of monthly searches for Australian trade jobs.
NextMinute CEO Alex Jenks said the discrepancy highlighted the ongoing recruitment challenges faced by trade businesses.
These shortages are slowing down projects, driving up costs, and putting pressure on business owners,” he said.
“Interestingly, the countries showing the most interest don’t always align with the trades in greatest need.
“For example, airconditioning and refrigeration mechanics have over 500 official vacancies, but little international search activity, pointing to blind spots in global awareness of Australia’s workforce needs.”
Australia needs to think modular
With Australia forecast to fall 262,000 homes short of its national 1.2 million housing target by 2029, Ray White Group senior economist Nerida Conisbee said a modular approach was needed to address ongoing construction concerns.
“It’s taking things like trusses off site and making it more of a manufacturing process, as opposed to building them on site where you need far more skilled labour,” she said.
“Another example would be kitchens and bathrooms which are really time consuming and expensive to build on site. So if you just have to assemble them within a house, that makes it a lot cheaper…everything else can be done offshore.
“Another thing to look at would be the way we design houses. One of the reasons why it’s so expensive to build is because Australians really love their houses to be different from their neighbours.
“And so, if we’re looking at new areas, if we’re starting to build houses that are very similar, then it becomes a lot quicker and cheaper to build houses.”
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