Imminent Price Rises for Material Supplies

You may have heard whispers of this within your circles, or perhaps you’ve heard rumours on the nightly news. Regardless, the word on the street is absolutely true unfortunately. The cost of building materials, not just in Australia but worldwide, is on the rise.

Builders and other people within the industry have been sounding the warning bell throughout 2021 with many factors being at play including port delays and increase in demand for materials and labour.

Data published by CoreLogic in August of this year shows that building costs in the June quarter increased by 1.4%, a statistic made even more enlightening when you consider that inflation was 0.8% and wage growth just 0.4%.

So what has created this problem exactly?

Masters Builders Queensland says the following things have all played a part:

A surge in Demand due to the Government funded HomeBuilder grant
Lower interest rates and a more relaxed lending environment
Repeated lockdowns disrupting schedules and supply chains.
A rise in people moving from interstate.
Continued work from previous natural disasters

This is made worse if you’re building your first home or have already sold your previous home, with a rental crisis currently taking place in Australia which is especially bad in Queensland as many escape constant lockdown in southern states.

According to the Australian Institute of Health and Welfare, more than 37,000 Australians have moved to Queensland since the start of the pandemic. Sadly though, there is no end in sight for the rental crisis.

What does the future hold for the building industry and what can you do to avoid these extra costs and delays?

Similar to the rental market, building costs aren’t expecting to get better anytime soon. In fact, it has been predicted that they will dramatically increase in the final quarter of this year.

However, a recent report published by the Housing Industry Association suggests that the current boom we are going through will end by 2022, signally good news for consumers but not the greatest of news for builders.

The report goes on to say that currently, homes are taking double the time they usually would to build and experts suggest that the industry will face a downturn after its peak.

This is due to the fact that homeowners who commenced building their homes using the Home Builders Grant Homeowners will see the construction on their investment by mid 2022.

So sit tight. Prices will most likely fall next year due to demand drying up.

Hopefully supply will return to its usual conditions as we see the end of restrictions and border closures due to COVID-19.

Thinking Of Renovating?

Don’t let the price rise scare you out of renovating!

At JM Homes, we’ve been navigating this situation throughout 2021 and are confident in our sources and pricing for materials. As we move closer to next year, with prices expected to fall, now is the perfect time to start planning your custom home build or renovation.