The Building Environment in 2022

Recent government stimulus packages in the housing sector have caused a significant spike in the demand for new housing, and although the demand hit its peak back in the middle of last year, the building companies and trades are still way behind.

In addition to the shortage of labour, the cost of raw materials has also risen due to higher demand.  Steel and timber (both essential for the construction of new homes) are two products which have been particularly hit.

Naturally, builders are feeling the pain of increased material costs: a significant number of building companies have folded recently, with more predicted to follow in their steps.  The reality is that with the rise in raw material costs, builders are finding themselves unable to fulfil fixed-priced contracts.

In short, the building sector is a busy one, but high costs and shortages of labour and materials have made it very unpredictable.

Any investment involves a certain risk factor though, so before you sign on the dotted line, be sure to do your research.  As the investor, you will be sinking a significant amount of money and trust into your builder, so you deserve to be fully acquainted with the risks and price hikes of construction from the get-go.

So, To Build or Not to Build?

That is the question!  And there’s no right or wrong answer!

Yes, building offers advantages over buying an existing property; however, you need to be fully aware of what you’re letting yourself into, and have a thorough understanding of each step of the process.

Here are a few areas to focus on:

1. Finding Suitable Land

Finding a block that ticks all the boxes might be your first real challenge: a piece of green in a good neighbourhood and close enough to schools, friends, family, work etc. isn’t always easy to come by.  Make sure you understand the details of any encumbrances or council requirements on available land.

It’s important to think carefully about the location of your home because it can significantly impact on the resale value of your property.

2. What will it Cost?

The cost of building materials have skyrocketed over the past two years.  In fact, the Australian Bureau of Statistics suggests that the price of building materials increased by as much as 12% in 2021!  It’s not rocket science: increased demand + short supply = high prices.

Labour costs have also risen – bricklayers, carpenters, roofers and other tradies are in short supply.

Many builders offer standard house designs, and changes to the basic plans can be pretty hard on your pocket.  If you want a customised plan, the reality is that you’re going to have to pay extra for it.

Figures released from the ABS in April 2022 suggest that the cost of building a home in Australia averages at about $473,000.  According to a report recently published by Hipages, the cost of new homes in Australia per square meter ranges from $1300/m² – $3900/m².  It is important to note that these are only ballpark figures: location, site, design and finishes will all impact directly on these numbers.

3. Finding the Right Builder

As we mentioned before, you’ll be relying on your builder to pull the whole thing together, so it’s important that you find a team who are reliable, trustworthy and competent.  With the right builder, the construction of your home will be an awesome experience; with a builder who isn’t up to the mark, it’ll be misery from go to “whoa”!

If you’re a newbie to the construction world, take your time choosing your builder.  Talk to friends, family and other contacts who have built and ask about their experiences.  Research companies online and look at reviews.  Visit display homes and physically drive by homes built by different companies.

While the bottom dollar is certainly going to be a major player in your decision, don’t let it be the deciding factor – like any industry, you’ll get what you pay for, and the cheapest quote might end up costing you a heap in stress and re-do’s.

Get quotes from several builders and compare them: read all of the fine print and take time to understand what’s included in each quote – you want to be sure you’re comparing apples with apples.

Meet with different builders face to face – there’s nothing like a physical meeting to determine whether he/she is someone you can communicate easily with and trust.

4. Delays

Unfortunately, in the construction world, delays have become the new normal.  But, as they say, forewarned is forearmed: if you’re prepared for delays in your project, you won’t be so disappointed if and when they come!

5. Strained Relationships

Stress takes its toll on everyone, and building a new home is a sure-fire way to test your patience and the strength of your relationships (for better or for worse!).

Preparation for the experience is essential.  Be honest and open with your partner and family members about what to expect during the build.  Remember, relationships are more important than your house.  Be prepared to go the extra mile for your someone special – try to be patient and understanding, and turn the challenges into positive learning experiences.

At Love & Co, we believe that a building a house can be a positive and extremely rewarding experience.  But understanding what you’re in for is essential – time spent planning and preparing is never wasted, and it could be your ticket to saving your sanity while you turn your dream home into a reality!

The information in this article is for information purposes only and should not be taken as financial, legal or personal advice.

While care has been taken to ensure that information contained in this article is true and correct at the time of publishing, any changes after the time of publication may impact on the accuracy of this information.

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