Gold Coast builders face going bust as construction costs and delays hit houses and units

Some Gold Gold Coast builders face going broke in 2022 because of one devastating reason – which is being blamed for both the cost of houses going up and long construction delays.

Struggling Gold Coast builders are dipping into their own pockets to honour housing contracts.

The Gold Coast’s peak construction group warns the situation is becoming untenable and would worsen this month when the cost of materials again spiked.

Master Builders Gold Coast boss Adam Profke said the increased costs were hitting both builders and buyers who were paying more for units and homes.

“The bottom line is that the cost of construction is going up and that means consumers and homeowners will inevitably have to pay more.

Some Gold Coast builders are dipping into their own pockets to honour housing contracts. Picture: Liam Kidston

“Builders’ margins are begin eroded and it is at the point where some are effectively having to pay to finish off the homes based on the terms of the original contract.

“Some builders are going to go into administration because they cannot sustain those kinds of losses. You just can’t lose $20,000 on every house and remain operating.”

The shortages are primarily the result of worldwide supply chain issues as well as the significant increase in construction activity in the past 18 months.

Materials in short supply include wood and steel, with the latter now costing up to $2300 a tonne.

Mr Profke said the increasing construction costs and the significant number of projects underway on the Gold Coast meant tradies were booked out until early 2024, with some houses now taking up to a year to build.

Some Gold Coast builders are booked out for all of 2022 and 2023.

“What it means for consumers is that it may take 12 months to build a house now whereas it would have only taken six-to-nine months in previous years.

“This will in turn put pressure on the rental market because people will be staying in their rentals for longer while waiting for their houses to get built.”

A Gold Coast apartment essentials report by property consulting firm Urbis in late 2021 revealed more units changed hands in the first nine months of last year than any other year on record.

The city has a 2.2-month supply of units for sale, almost half the 4.2-months recorded for the March-June quarter.

Just 517 apartments remained for sale at the end of September, down from 624 at the end of June. At the end of June 2018 there were 2594.

Costs are going up and builders are facing tough times.

The southern beaches from Mermaid Beach to Tweed Heads had the lowest supply with just 45 apartments.

Experienced developer Norm Rix, who has been building on the Gold Coast for more than 60 years, said he had never seen a confluence of so many potentially damaging factors.

Developer Norm Rix. Picture: Jerad Williams

“There is a serious under-supply of materials – everything from trusses to tiles and this is leading to major problems for all builders being able to quote on houses, sheds and even high-rises.

“I don’t know how long this can last but inflation is moving up and this is going to have further impacts.

“In my 60 years of business on the Gold Coast I have never seen a situation like this where builders cannot give quotes on projects and with interest rates rising this year, it will cause even more problems.

“Right now is the time to be very careful and act cautiously because things will change quickly.”