The latest data from the Australian Bureau of Statistics (ABS) shows some patchy areas of recovery; however, the building and construction industry remains on high alert as high-profile insolvencies send shockwaves through an industry doing it tough. With the industry just starting to get back onto an even keel, now is not the time to rock the boat.

Queensland’s new dwelling commencements dropped a massive 17 per cent during the December quarter, back to 35,000 for the year, leaving the industry building well short of what Queensland needs.

“Building approvals in April 2023 remained at their lowest level in over a decade, with declines continuing for both houses and multi-units,” stated Tom Devitt, HIA Senior Economist.

Master Builders CEO, Paul Bidwell says the latest building approvals show a turnaround in some areas.

“Along with a pause in interest rates rises and some stabilisation in trade and material delays and cost hikes, there is a glimmer of hope that the worst is behind us,” he said.

In the three months to February 2023, total dwelling approvals rose by 5.3 per cent, buoyed largely by unit approvals, which rose 29.2 per cent during the same period. Detached housing continued to languish, dropping by 10.3 per cent over the same period.

However, there is clearly a two-speed economy emerging for Queensland, as the growth in unit approvals is concentrated in the southeast, particularly Brisbane and the Gold Coast. Greater Brisbane nearly doubled the number of units approved, increasing by 81.8 per cent in three months, while the Gold Coast unit approvals increased by 48.5 per cent in the same period.

On the flip side, regional Queensland is bearing the brunt of the pain, where there is little to offset the continued fall in detached housing approvals. Townsville and Mackay approvals were in negative territory for the quarter to February, with Townsville approvals dropping 59.8 per cent and Mackay by 41.6 per cent. Other regions fared slightly better, but they remain in negative territory for the time being.

“While it appears that builders are gradually starting to find their way through the continued challenges of material price hikes and labour shortages, the reality on the ground is that more needs to be done if they are to deliver the increase in housing that is so desperately needed,” Mr Bidwell said.

He says builders caught by fixed price contracts while labour and material prices skyrocketed have faced a profitless boom for too long and this situation is only sustainable for so long. “They need a soft landing or there will be a huge cliff for an already-stressed industry, and we’ll most certainly see more businesses collapsing.

“Unfortunately, there is no one ‘silver bullet’ solution to the problem. Governments at all levels need to think outside the square and consider what they can do in many areas. Following the housing roundtable recently, we now need to see some action.

“The Queensland Government has already acknowledged the industry is facing challenging times by delaying the next phase of project trust accounts, they now need to look to other areas where levers can be pulled to provide some relief for the industry and homeowners,” he said.

The National Construction Code (NCC) changes are an easy win, and a decision is desperately needed on the delay of accessible housing and energy efficiency requirements, slated to be introduced from 1 October 2023. While the industry still awaits clarification on a number of points, they are hamstrung in getting prepared for these changes and meeting the 1 October 2023 is a tall order. The changes will also add to the cost of building a home to the tune of around $20,000, at a time when costs have already increased by 40 per cent over the past three years. Now is not a logical time to be adding to the cost of building.

Mr Bidwell says, Master Builders are generally calling for a greater focus on increasing productivity via government policy.

“This can be done through initiatives such as a state-wide mandatory housing code – which would allow a single set of siting rules for housing; a general reduction of the red tape stifling the industry so we can keep small businesses operating; as well as temporary licensing for interstate qualified trades to work for a licensed builder, for up to 12 months,” he said.

 

Source:

https://www.mbqld.com.au/news-and-publications/media/early-signs-of-recovery-as-unit-approvals-climb

https://hia.com.au/our-industry/newsroom/economic-research-and-forecasting/2023/05/building-approvals-continue-to-fall-as-rates-rise