South West builder tips country to pay more for residential builds as supplies dry up

A leading South West builder predicts a perfect storm for residential builds in the regions, with rising material costs, skills shortages, and huge numbers of city-dwellers flocking to live in the country putting pressure on home builders. Single-storey homes are already taking three months longer to build and two-storey homes nearly six months longer. Global material shortages on items like timber, steel, tiles and appliances have left builders unable to absorb increasing costs. When borders reopen early in 2022, demand for new homes in the region could further increase pricing pressure on housing, construction, labour and materials. Figures released by the Cordell Construction Cost Index show WA residential construction costs have risen 3.4 per cent in the last quarter. Since the start of the pandemic 54,000 people people have left major cities to live in the regions. In the 2021 March quarter alone 11,800 people moved from Australia’s capital cities to regional areas, according to the Australian Bureau of Statistics. Australia’s new Federal Minister for Regionalisation, Bridget McKenzie has also released a plan to drive the nation’s population growth in the regions, which would target cities like Busselton and Bunbury. Jay Walter, joint general manager of JWH Group which owns the State’s biggest regional builders, WA Country Builders, said the regions would be hit hardest when price increases and worker shortages collided. “The regions have been further compounded as generally materials attract a higher cost than city centres due to added logistics, handling and storage of items which is added to the cost,” he said. “Historically we’ve been able to bring on additional labour from the east coast and overseas but with construction industries being stimulated by governments in numerous parts of the world, it’s a bit of a ‘first time event’ to have so much work globally.” Mr Walter said this global demand had flowed on to material shortages, with shipping and transport costs increasing. “This has led to price increases as demand outstrips supply,” he said. “All of these costs have compounded with builders unable to absorb them all in their margins which has let to quite significant cost increases.” Mr Walter warned people wanting to build their home would see prices increase in the short term. “At the moment we’ll see house construction increase in price, but we need to be cognisant that we’ve come off a very light five years with a downturn where costs were driven very low to an unsustainable level both in materials and labour so this has been a price correction coupled with a general increase due to demand,” he said. “It highlights over the last 5 years how good it was to build, and now demonstrates part of the demand that has been pent up.” While State and Federal governments have been engaging with industry to help unclog the pipeline, Mr Walter said this might not be enough. “Even with borders open, it won’t be easy to attract people when there’s so much work globally,” he said. “It will be important that we promote ourselves to the world based on our track record with COVID and few cases, but also what we as a State have to offer by way of affordability, lifestyle and culture.”