Fears over construction crisis force housing market shift

First we hoarded toilet paper, now builders are hoarding steel and timber as tradies get harder to nail down, supercharging demand for certain homes in the midst of Qld’s construction crisis.

Sub-contractors and tradesmen have been forced to walk off the job as construction companies collapse. Picture: NCA NewsWire / Dan Peled

Queensland’s construction crisis has forced a market shift, supercharging demand for certain types of homes, with some builders now hoarding steel and timber as tradies become harder to nail down.

The situation is expected to worsen, with the Property Council of Queensland warning the full weight of rising costs, availability of construction materials and ongoing labour shortages were “only now being realised” and could take the rest of the decade to pan out.

Experts say the crisis has already caused a shift in real estate market sentiment, with buyers averse to anything requiring construction work, driving up demand for move-in-ready homes.

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Sub-contractors and tradesmen walked off the 443 Queens Street construction site in Brisbane's CBD after building giant Probuild hit the skids. Picture: NCA NewsWire / Dan Peled.

Property Council Qld executive director Jen Williams believes “soaring construction costs, crippling supply chain issues, natural disaster recovery and a well-documented skills shortage are culminating in a rare combination of circumstances set to impact the industry for the foreseeable future”.

Buildcorp new business manager Allison Turner said supply lines so heavily pandemic-impacted that some builders were now “hoarding” materials.

“Our estimating team since August last year has been receiving weekly notifications regarding price increases and very rarely are they in single digit increases,” she said.

“Just as we were all hoarding toilet paper, we’re now seeing different contractors hoarding materials like gyprock, piping and all sorts of different things. So that’s just adding to the pressure.”

Around 6,500 Queensland homes were tagged as renovated in listings as buyers grow fearful of properties requiring extra construction work. Picture: Brendan Radke

Construction Skills Qld research director Robert Sobyra said the building pipeline was “chockers”. In December it was valued at about $4b more than the peak of Brisbane’s apartment boom – and prices, he said, rarely fell after tasting a rise.

“Prices never go backwards. Once they hit a certain level, they just stay flat for a long period of time unless you have a serious event like a GFC.”

He warned that took six years to reach the price rises seen during the pandemic and would take another six years to flatten out.

Around 6,500 Queensland homes listed on realestate.com.au this week were tagged as renovated to entice buyers looking to avoid the hassle of dealing with builders right now. Houses continue to see the biggest interest, with the appetite for land set to taper amid consumer fears over construction timelines. This has seen estate sales businesses like Plantation Homes reaching out to buyers with a promise that house and land packages taken up in their developments would be completed, though other SEQ developers such as PEET don’t have any package prices available, only showing prices for land lots.

New build estates have tried to reassure customers though some now don’t show house and land pricing. Picture: Brendan Radke

Buyers agent and author of Buy Now Lloyd Edge said clients were now averse to property requiring construction.

“Many people are,” he said, “we’ve seen the supply chain has a lot of delays. Construction prices are going up every two weeks … There was huge demand for construction through the pandemic but that’s also left a few people high and dry.”

He said even those on fixed price contracts saw their builders say they can’t build for that and ask for variations.

“Materials have gone up so much, that’s why so many builders have gone broke this year. Now they’re actually putting a clause in the contract which is not allowing fixed price, which is making it harder with lending, because that’s what banks want.”

“Builders won’t commit to fixed price contracts and banks don’t want it unless it’s fixed price, so buyers are hesitant. Unless they have a buffer a lot of people are staying away from them.”

Subbies and tradies are walking a fine line between major demand for their services and pricing their work correctly with materials constantly rising in cost. Picture: NCA NewsWire / Dan Peled

The swing is a major shift for investors looking for quick gains that renovation or upgrades bring.

“My buyers love doing things adding value. That used to be through things like construction of new dwellings and duplexes,” Mr Edge said, “but because of the way the construction industry is at the moment, a lot of them are turning to more simple cosmetic type renovations.”

Even for a large company like Buildcorp, lack of guaranteed access to workers has become such an issue that large contracts are being split between three subbies because one alone could not longer guarantee meeting targets. And it could get even worse.

”We still need to see what’s happening with the Olympics and how that might increase the pipeline as well, so as that becomes clear we’ll see more pressures.”

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