Lengthy delays turn buyers off buying new apartments. These developers are combatting the problem.
The rise of builder-developers has emerged as a solution to current market pressures as developers realise the challenges facing the construction sector are far more than temporary roadblocks.
A growing cohort of residential developers have found a work-around, establishing an in-house construction company to complete projects faster and within budget. Edge Visionary Living, Pikos Group, Mosaic Property Group, Highlife Property Group and Marquee Property Developer are among Australian firms operating their own construction firm in-house.
The decision to take greater control over the construction of their developments comes after ongoing challenges facing the construction sector. Labour shortages and a significant increase in costs of building materials have blown out build times in recent years, leading to industry experts to call for coordinated policy efforts to address the backlog.
There have been moves to streamline building approvals and reduce regulatory burdens, but a big part of the problem is the fact that the time it takes to build a residential home in Australia has blown out over the past decade with significantly longer waits as average construction times grow.
Subcontractor performance remains a critical issue for developers, with research showing that 82% of developers report financial losses linked to subcontractor insolvency in FY24.
Construction timelines have elongated across the apartment and detached housing market over the past decade, adding further costs to the price of building a home. Image: Getty
Laid out in the BDO Australia Construction Survey Report in 2024, more than half of the respondents employ more than 1,000 subcontractors and reported that increased competition and supply chain disruptions had significantly impacted profitability. While 55% reported minor impacts, 27% suffered significant financial losses due to construction delays.
Construction activity remains well behind the target to construct 1.2 million homes over the five years to 2029, points out PropTrack’s executive manager, economics, Angus Moore.
Recent data from the Australian Bureau of Statistics shows little sign of change, with around 43,000 to 44,000 new homes being built per quarter.
According to Mr Moore: “That pace is around 25%to 30% below the pace we’d need to hit the government’s target of 1.2 million homes over five years".
The edge
But developers are fighting back. Gavin Hawkins, executive director of Edge Visionary Living has commented that a series of builder insolvencies and rising costs has been tough on developers in recent years.
In response, Edge Construction was established as the in-house construction arm of Edge Visionary Living in 2023. Established to offer greater quality control, transparency, consistency and accountability, the firm operates exclusively on Edge Visionary Living projects, employing more than 40 people.
Among its most recent projects, Edge Construction completed the Edge Broadway on the Bay project in Crawley, Western Australia, with 21 apartments completed in October this year.
According to the developer, the in-house construction capability has been a game changer to remove the disconnect that can occur when working with external builders. Having one team with shared priorities and accountability means being able to respond quickly to site conditions, adapt programs proactively and keep momentum on site even during periods of industry-wide pressure.
“By having our construction arm embedded within the broader Edge Visionary Living team, we maintain oversight of the build program from day one. Design, development and construction work together, allowing us to anticipate challenges early, streamline decisions and maintain tighter control over sequencing and procurement,” Mr Hawkins said.
Edge Construction was established as the in-house construction arm of Edge Visionary Living in 2023. Image: Edge Construction.
It has cemented the deal with buyers. “Purchasers recognise that this model eliminates many of the risks associated with third party builders. Instead of relying on external parties for competing priorities, they see a single, unified team with shared accountability for quality, timelines and outcomes. This continuity results in clearer communication, more predictable delivery and a heightened level of trust,” Mr Hawkins said.
On a high
The construction arm of Highlife Property Group grew organically, explains director James George, who was previously a carpenter and builder for many years. “Bringing construction in-house gives us a level of quality control and alignment that’s hard to achieve any other way,” Mr George said.
The firm’s latest project is Blonde Bilinga, comprising 19 beachfront apartments on the Gold Coast. Construction commenced in June this year, and the project is on track for completion mid-2027.
“Because we manage everything internally, we understand the true costs and can keep budgets accurate and accountable. And with fewer disconnects and complete visibility, we can run tighter programs and keep projects moving even when challenges arise,” he said.
An artist's impression of Blonde Bilinga, which is under construction on the Gold Coast. Image: Highlife Property Group.
Housing shortage
While current data indicates it's unlikely the government’s ambitious goal to deliver over a million new homes by 2029 will be met, any increase in the efficiency of getting those homes on the ground is extremely welcome.
If developers can keep timeframes tight and optimise construction, there's the potential to reign in cost blowouts that have contributed to rising prices for new builds on the consumer side.
Flagging that recent figures for October show a decline in New Homes sales across Australia, HIA chief economist stressed that cost savings are essential to supporting residential building.
"Lowering the cost of delivering new lots to market will be key to a sustainable increase in new home sales and to house Australia’s existing and growing population, he said.
Are you interested in learning more about Australian home building? Check out our dedicated New Homes section.
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