Almost 40,000 new homes to be built in 2022 but builders warned of prices hikes up to 20 per cent

A future outlook report on 2022 has revealed what would otherwise be a prosperous year for the building industry could fall flat due to steep price hikes.

A future outlook report on 2022 suggests delivery delays and price hikes could dampen an otherwise prosperous year. Picture: Liam Kidston

Queensland’s building industry is facing cost blowouts of up to 20 per cent as tradies battle to deliver almost 40,000 new homes across the state, according to a forecast report.

Master Builders Queensland 2022 Outlook predicts a “challenging” but potentially prosperous year with pandemic-driven price hikes and shortages and delivery delays in building materials as the stumbling blocks.

Housing construction at Greenbank. It’s expected 38,000 new homes will be built in 2022 according to Master Builders Qld 2022 Outlook report. Picture: Liam Kidston

On the back of 50,000 development approvals for homes, including individual units, across Queensland in 2021, the report predicts the 38,000 new builds, a 20 per cent rise on pre-pandemic levels (32,000 in 2019).

The outlook is based on building approvals, lending trends, economic analysis that takes in population growth, employment and inflation and feedback from industry leaders, Master Builders Queensland` stated.

However, there will be about 5,000 fewer new builds in 2022 than last year when demand exploded following government incentives including the HomeBuilder grant.

If not for the fear of price hikes and delays with the delivery of building materials, it would otherwise be a very promising outlook, said Master Builders Qld deputy CEO Paul Bidwell.

Master Builders Deputy CEO Paul Bidwell says it should be a prosperous year for the building industry although price hikes and delivery delays are the major hurdles. Picture: Tertius Pickard

“It should be a cracking year on the demand side, because you have low-interest rates, rising property values, investor loans are up and a lot of owner-occupiers are still getting loans for renovations,” Mr Bidwell said.

“Despite the positive outlook, we must acknowledge that builders face enormous and unprecedented challenges in delivering these new homes.

“The ongoing price hikes and trade and material delays are a serious thorn in the industry’s side, and we expect the issue to run right through 2022.”

ABS figures indicate building costs rose 12.9 per cent in 2021, but it was double, if not triple, that figure, said Master Builders Qld Housing chairman Steve Havas.

Master Builders Housing chairman and Garth Chapman director Steve Havas says costs rose around 30 per cent in 2021 and is expecting double digit increases this year. Picture: John Gass

Double-digit price hikes are expected in 2022 but not as severe as the disruption caused by the pandemic starts to ease, he said.

“My costs went up 28 per cent and anecdotally my peers reported 25 to 35 per cent depending on the size of their business and what their buying power was,” the director of Garth Chapman Queenslanders said.

“The strongest prices rise came from timber and structural timber and they are tied to the world price.

“Suppliers, on a weekly basis, are advising of cost increases, but I would expect them to be more subdued in 2022 and somewhere between 10 and 20 per cent.”

Adding to the complex issues facing the industry is the potential of another variant of Covid-19, the report warned.

Structural timber costs rose sharply in 2021, and remains to be seen if price hikes will ease in 2022. Picture: Dan Peled

Along with several industry leaders, including the HIA and Master Electricians, Master Builders Qld have lobbied the Queensland Government for isolation exemptions for critical construction workers who are close contacts.

“Any further delays will create more disruption and impact an industry already struggling,” Mr Bidwell said.

Housing approvals across Queensland increased in every region with the highest in the Downs & Western (56.9 per cent) while there was a 20.1 per cent increase across Greater Brisbane and 33 per cent on the Sunshine Coast.

The smallest increase was on the Gold Coast (5.7 per cent) although the number of approvals for apartments more than doubled from 2055 in 2020 to 4144 last year.

Year-on-Year Housing approvals 2021

2020 2021 Change (%)

Greater Brisbane – 19,420 23,323 20.1

Gold Coast – 1727 1825 5.7

Sunshine Coast – 2563 3408 33

Downs & Western – 989 1552 56.9

Wide Bay Burnett – 1765 2482 40.6

Central Qld – 580 758 24.2

Mackay / Whitsundays – 566 834 47.3

Nth Qld – 758 1057 39.4

Far Nth Qld – 1120 1436 28.2

Total 29,488 36,675 24.37

Year-on-Year apartment (individual) approvals 2021

2020 2021 Change (%)

Greater Brisbane – 6615 7912 19.6

Gold Coast – 2055 4144 101.7

Sunshine Coast – 1183 992 -16.1

Downs & Western – 128 104 -18.8

Wide Bay Burnett – 54 127 135.2

Central Qld – 25 72 188

Mackay / Whitsundays – 23 136 491.3

Nth Qld – 47 54 14.9

Far Nth Qld – 41 76 85.4

Total 10,171 13,617 33.9

*Source: Master Builders Qld