MILDURA housing starts have not declined despite near-record increases in construction costs, says Jason Gowers, general manager of Col Gowers Homes.
CoreLogic’s online construction database, Cordell Connect, reported that residential construction costs rose 10% in the past 12 months, the highest annual growth rate on record outside of India. introduction of the GST in 2000.
The increase was attributed to the escalating cost of supplies and costs for suppliers, and affects the number of construction sites nationwide.
The Australian Bureau of Statistics reported last week that the total number of housing unit starts fell 6.5% nationwide and the value of all construction work fell. by 0.5%.
Mr Gowers, however, said he did not see the price increase having an effect on the number of people in Mildura choosing to build.
He said the region’s interest in building was high as many were trying to start building before prices rose further.
“The cost of construction has certainly increased, but I think most people think ‘the right time to build was 12 months ago, the second good time is now’.”
He also believed that the shortage of local housing and the increase in the housing market were also pushing people to build.
“There is still a bit of a housing shortage locally,” he said.
“And when people look at what’s for sale and the prices of those homes, construction, even though there have been price increases, is still a cheaper alternative for most.”
Mr Gowers said rising costs had affected the whole construction industry, but ‘our industry is still going strong’.
“Any price increase makes it harder for the builders because we are signing a fixed price contract and anything that changes during construction has to be managed by the builder,” he said.
“(Col Gowers Homes) goes above and beyond to source materials to ensure we can maintain prices for our customers.
“We’re spending a lot of time in selections, locking in customer choices so we can order and guarantee cheaper prices for our customers, but it really is a tough time.”
Cordwell predicted construction costs would remain high for some time, but Mr Gowers said he hoped prices would start to stabilize.
“With everything going on in the world, I think prices are unlikely to fall, but I’m quietly optimistic that prices will stabilize soon,” he said.
Ray White, managing director and commercial agent, Damian Portaro, said that although he had noticed a slight decrease in the number of vacant land bought locally, there had not been a “big change” in the market.
Mr Portaro said he believed purchases had only fallen slightly due to the lack of subdivisions in the market and that land sales would increase as more became available.
“There haven’t been that many sub-divisions in the market, but there are a few that are about to emerge,” he said.
“There are a lot of subdivisions to release in the next 12 months.”
Mr Portaro said he was aware that some people were hesitant to build due to rising prices, but said Mildura had a “healthy land appetite”.
CoreLogic construction cost estimator John Bennett said the increase in construction costs was due to rising costs within the industry.
“Suppliers frequently cite the impact of rising fuel, freight and electricity costs on their bottom line and these are significant additional challenges facing the industry,” he said.
“It is important to note that these factors only add to other pressures that have impacted the residential construction industry for 18 months now, such as labor availability and overhead costs. .
“A shortage of labor and materials means delayed completion times, leaving builders vulnerable to market changes and holding costs.”