Brisbane’s residential building industry continues to struggle with an unmanageable volume of work. In this article, we break down the impact of the HomeBuilder boom and the ongoing repairs in the wake of the October hailstorms. What can you expect when building in Brisbane this year, and what can you do about a builder extension? We offer some tips and services to help you manage your build.
The “perfect storm”
It’s impossible to talk about current problems in the building industry without looking over our shoulder at 2020. We’ve spoken about the impact of COVID-19 before, including its influence on the building market and rising costs in Queensland. In addition to lockdowns and concerns for employee health, builders have had to work around disruptions to global supply chains, increased numbers of renovations and government grants.
The HomeBuilder boom
The government implemented the HomeBuilder scheme in mid-2020 as a direct response to COVID-19. Intended to safeguard the building industry and stimulate economic recovery, the grant awards up to $25,000 for eligible owner-occupiers. The grant was enormously successful. Over 93,000 Australians are making the most of the federal government’s grant. In Queensland alone, the number of new dwellings is up 61%.
So what does this tell us? At first glance, the industry appears to be booming; most builders have doubled or tripled their incoming sales as a direct result of the grant. Every state and territory is above peak numbers for new builds and renovations. In and of itself, this is not bad news. Under normal circumstances, having an industry that performs so well is great for the economy and employment rates.
Unfortunately, the boom is more of a rapid influx of projects in a very short space of time. We are in a position where a combination of things—including trade shortages and an extraordinary number of builds—have led to what sources are calling “the perfect storm.” Let’s take a closer look.
The Buildi benefit
A builder extension can be more than annoying—it can also be costly.
One of our clients was asked to sign a 65 working day extension (13 weeks).
We negotiated to have this changed to 65 calendar days (or 9 weeks).
This saved our client 4 weeks of rent, totalling $1800!
Contact us for help like this and building advice from the ground up.
Timber and supply shortages
As you might imagine, this unprecedented workload places strain on the industry as a whole. Additional materials, labour and time are required to complete the projects but they are not all readily available. Luckily, HomeBuilder timeframes were relaxed, with required construction starts pushed from 6 to 18 months within contract signing. Had the government not done so, the Australian residential building market was at real risk of collapsing in on itself.
Australia is not alone in its upward swing. There is a disproportionately high demand for building materials around the world. Imports are either delayed due to ongoing supply chain disruptions and freight costs, or partially directed elsewhere to supplement building booms in Canada, Europe and the US. The most coveted commodity is framing timber.
The timber shortage has left the domestic market in dire straits, with home building especially affected as framing crews cannot get their hands on frames.
Stephen Taylor, Supply setback for builders, Mornington Peninsula News.
It is estimated that 20-25% of our timber supply is sourced overseas. There is an increased pressure on local timber yards to fill the gap, but recent bushfires and timber mill closures have reduced our ability to effectively meet demand.
Trades shortage and repairs
In addition to the scarcity of building materials, builders are grappling with a stretched workforce. There is a national shortage of skilled tradespeople in the construction industry. This problem is exacerbated in southeast Queensland, where insurance claims skyrocketed in response to the late 2020 hailstorms across Brisbane, Ipswich and Rockhampton. Many trade contractors have had to divert attention from new builds to urgent repairs.
Roofing contractors are especially sought-after. According to Master Builders Queensland deputy CEO Paul Bidwell, roofing services are almost impossible to obtain while the repairs continue. With damages costing over $800 million and an estimated year of work still to do, the shortage of trades is likely to be felt throughout the rest of 2021 in the greater Brisbane region.
What are your rights?
The challenges faced by builders mean that a lot of liberties are being taken by unscrupulous scammers or builders who are pushed to the limit. There is a potential for rush jobs, negligent practices and ‘shortcuts’ to meet deadlines. It’s important that you know your rights and the agreed terms in your contract.
In this example, it is made clear that the builder must notify the client of delays within 10 business days. The builder extension must be made clear with reasonable explanations. According to the HIA, it will benefit both sides to agree on an extension timeframe so that the project can move forward.
Check your contract criteria if you are informed of a builder extension. Ensure that you have been given enough notice, with a justified reason and timeframe. There are some limitations to the increases in cost and time that a builder may impose. If you need help in understanding the contract you have signed, please get in touch with us.
Small builders at risk
It’s an unfortunate reality that a number of builders are not going to make it through the next 12 months. Where they are available, building materials and tradespeople are more expensive. For example, timber and steel cost approximately 15% more than average. Prices are estimated to rise as high as 30% in the future. Small and medium sized builders have a tough choice to make: do you absorb the additional cost as the client, or do they take the costs on and affect their bottom line? Many builders cannot afford to do either.
Excessive quote? Speak with a Buildi broker to find out if your charges are reasonable.
The industry is in a state of upheaval and uncertainty. Contractors and suppliers are likely to choose stable work that pays more. Many are choosing insurance repairs or larger builders with plenty of work. In fact, some suppliers are refusing to quote small builders or work with them at all.
Because of this, smaller builders are too much of a risk to take on. We have seen Brisbane builder PlanBuild Homes recently go into liquidation, leaving 40 homes unfinished. Sadly, some of them were barely started. This is why it is so important to work with a building broker.
Moving forward with your builder extension
Are you in the middle of a new build or thinking about taking the plunge this year? It is important to know about a possible builder extension and what you can do about it.
Useful tips
- Be informed: know the issues facing the building industry so that you are aware of possible delays.
- Communicate regularly: with your builder or site coordinator. Try to keep up-to-date with site changes, completion date estimates and handover timeframes.
- Ask questions: don’t be silent if a delay seems unrealistic or a price increase seems unfair. If your builder is not forthcoming, then you can turn to a building broker like Buildi.
- Don’t end your lease too early: try to have a safe buffer, especially if you are renting while waiting for your new home. Consider realistic timeframes.
- Try to be patient: builders are facing huge challenges right now and most are working as fast as possible to complete projects. Many issues are out of the builder’s control (such as bank delays).
Getting help
There are resources out there to help you with these situations. For example, the HIA have advice for clients dealing with delays in residential construction.
If you are worried about the possibility of a builder extension, or you would like some advice, do not hesitate to contact Buildi today. Our building brokers work as advocates to look after your best interests in the building process. Book a free consultation and get answers to your burning questions.
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