Brisbane developer Kevin Seymour warns Covid pandemic pain for Queensland building industry

Queensland builders are in a fight for survival as the Covid pandemic creates a profitless boom that may leave many facing collapse, claims a prominent Brisbane developer.

Queensland’s building sector is buckling under the strain of material shortages and cost blowouts in the wake of the Covid-19 pandemic which could see a wave of future business collapses.

While Queensland did not follow NSW’s lead and mandate a construction site shutdown, a combination of population growth, government incentives sparked by the Covid-19 pandemic and record low interest rates have conspired to create a severely stretched sector.

Consolidated Properties Group executive chairman Don O’Rorke said over the past six months it has been increasingly difficult to lock down prices.

“Because there has been such a demand for building services, sub contract prices are going through the roof — things like materials, steel, timber and timber and facades are all under pressure and there have been some price increases of up to 30 per cent,” he said.

Prominent developer Kevin Seymour. Picture: Jamie Hanson

“There has also been demand for labour. Getting sub contractors to even tender and then turn up for the full amount of work has been very difficult.”

Mr O’Rorke said materials price volatility meant builders has difficulty to hold prices beyond 30 days creating an unpredictable construction market.

Veteran Brisbane developer Kevin Seymour said material shortages were stretching supply chains causing delays and cost blowouts which will cause future problems.

“The property sector is going gangbusters but there will be real problems for builders in the next couple of years,” Mr Seymour said. “It takes time to build new supply chains.”

In April Master Builders Queensland warned that the HomeBuilder construction boom has created a “ticking time bomb” as surging costs of material and labour cuts profit margins in the building sector.

Master Builders Queensland deputy chief executive Paul Bidwell said the surge in new home projects sparked by HomeBuilder grants could send more builders to the wall as the price of everything from timber and pipes to plumbers and roofing contractors increases.

The average cost of a $300,000 new home in south-east Queensland could increase by up to $30,000, which in many cases could not be passed onto customers by builders. Materials make up about 60 per cent of a building’s costs with labour making up the rest.

“For some builders it is going to be a profitless boom because even though there is a lot of work out there, the margins are getting thinner,” Mr Bidwell said.

“While we can live with a profitless boom, what we don’t want is for builders to fall over. Builders are just going to have suck it up as there is no capacity to pass costs on.”