Builders face challenges

Builders face challenges

Sky-rocketing costs and Australia-wide material shortages have presented ongoing challenges for the local building industry in recent months.

MG Plasterers managing director Matt Patzel said costs had increased “dramatically” and material shortages had been “dreadful”.

Mr Patzel said steel costs had increased by 52% in the last 10 months and were increasing a further 10%, commercial sector ceiling tile costs had increased by 52% and insulation approximately 25%.

“It impacts the builders who have set contracts, we try to hold the price where we can and carry it as much as we can but it’s just out of control,” he said.

“I believe a lot of the suppliers have just jumped on board and put it up, one puts it up, they all put it up.”

Mr Patzel said freight costs had also gone “through the roof” and said the MG Plasterers fuel account had essentially doubled in the last three months.

Mr Patzel said the cost increases had affected every trade and all materials and all their products had been limited, which had led to the business experiencing an empty warehouse at times.

“We were struggling to get insulation and plaster and we have come back a fair bit now, but still insulation’s hard to get,” he said.

“We used to get two B-doubles a month of insulation, now we’re just getting randomly five or six bales, 10 bales of insulation when we usually get two or three hundred.”

Mr Patzel said the situation had started to improve for MG Plasterers, however builders were experiencing a backlog of housing and significantly longer build times.

“I do feel for the builders that have locked-in contracts and especially with COVID stuff, the first-home buyers grant and the amount of houses they have got to do, they’re having to work harder and harder for less profit,” he said.

“Then they implement these increases and they could have done those houses many months ago but the housing is still booming, we simply cannot keep up.

“But Mount Gambier being Mount Gambier, we’re pretty resilient down here, all the builders are very understandable with the material shortage.”

Empak Homes construction manager Clint Mitchell said timber had experienced particularly noticeable cost increases, however the increases had gradually worked their way through the entire building process.

“Materials, labour, it’s the whole lot of it, everything’s gone up so quickly it’s hard to manage, but you just do what you have got to do,” Mr Mitchell said.

“It’s pretty difficult to stay on top of it all because we have fixed-price contracts, our process has been to try and minimise our exposure, by signing contracts as late as possible and passing on price increases up to that point.

“Once the contract is signed, it is a fixed-price, so we have to wear any price increases for the whole build, basically.

“That’s how we try and manage it, it’s pretty hard, it’s a pretty difficult situation but nobody could envisage it increasing so dramatically.”

Mr Mitchell said a major issue was building times had effectively doubled, as a standard house would typically take around five or six months to build but was now taking around 10 months.

“So you have got to wear more costs on the way because it’s taking longer to build,” he said.

Mr Mitchell said COVID-19 continued to impact the industry, causing a shortage of trades and pushing building projects further behind.

He said the situation would stabilise eventually, however he was uncertain when this would occur.

Mr Mitchell said on a positive note, Empak Homes had sold a lot of land amongst the cost increases which had helped significantly.

“That’s been the good thing out of it, it’s not all doom and gloom,” he said.

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