Construction costs in Brisbane are surging, squeezing builders and potentially putting pressure on the housing market and state infrastructure pipeline.
Builders reported the cost to erect a home in south-east Queensland had climbed between $10,000 and $20,000 since the war with Iran began in late February, which had caused fuel prices to skyrocket.
“It’s certainly very concerning,” said Andrew Williams of GW Homes, which builds houses across Brisbane.
He said inflation had already been about 1 per cent a month due to pressures from major infrastructure projects before the war, but could now be between 1.5 per cent and 2 per cent.
Some materials had gone up by significantly more in under two months, he reported – the price of PVC piping climbed about 60 per cent, and electrical wiring was up about 40 per cent.
“It’s not a big component of the building, but again, you add it and it’s cumulative with everything else … it just keeps going and going and going,” Williams said.
He said the recent price rises were driven by the increased manufacturing costs of fossil fuel-intensive materials, as well as fuel levies being charged at every point in the supply chain.
Master Builders Queensland chief executive Paul Bidwell said businesses that had signed on to deliver work or material at a fixed price were most exposed.
“It really does feel like COVID again,” he said.
“If nothing is done to protect and assist builders, there’ll be another wave of insolvencies.
“It just remains to be seen how bad it gets.”
The industry body was sounding out intervention by the state government this week, with some builders calling for hardship payments.
How Brisbane house prices would be affected remained to be seen, with construction costs climbing as interest rates were forecast to climb further.
“The only good thing is that we’re in a rising property market, so far,” Bidwell said.
“And so long as they’re going up, then there is an opportunity that the banks might say, ‘Well, we can lend you more money.’
“It’s in everyone’s best interest to sit down and try to work it out because no one wins if one of the contractors go broke or the homeowner [is] crippled … there’s got to be a lot of goodwill.”
Williams added that he didn’t think the situation was as bad as the COVID pandemic had been, but said high demand didn’t mean Brisbane would be insulated.
“It’s all good to have housing demand, but if you can’t afford to buy or build the house, it doesn’t matter what the housing demand is, you’re not going to build,” he said.
The federal government has warned the conflict could affect the total number of homes built, and experts have warned infrastructure development could be slowed.
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