We had constant increasing costs of building material as well higher cost of tradies over last year or so.
Can someone in the industry give some glimpse how things are looking.
Will prices increase slow down or prices go down after election, when immigration opens up, reducing cost of labour.
Also few other things such as builders under strain, some small builders are going under liquidation. Talks about Metricon…
Do you have any view on the material costs/labourers
Costs have gone up 20-30% on all materials/labours in the past 12 months or so. Bricks/Concrete have stayed the same, however with fuel prices shooting up the freight side will probably force slight price increases on these soon enough. I have been told to expect more price rises in November for steel products including reinforcement. Availability of trades/material is still tight. Definitely will see a lot more building companies in financial stress. I don't see things settling down for another 24 months. The prices set today are now just the accepted rates and in my opinion wont go down, may have some increases left (10%?) but I think things have pretty much settled.
Thanks
Immigration isn't going to help much as the labour costs in construction are mostly for trade qualified contractors. The building companies that are going bankrupt are doing so because they tendered for big jobs on small profit margins and now that material/labour costs have increased they are taking losses on those contracts.
Ask Metricon.. they are in shit now too
News out today that they are going under. Having "crisis" talks with The Victorian Government.
That's what has been said on Sunrise this morning.
You'd be shitting hot coals if you had a deposit out with any home builder right now… Theres NO WAY I'd hand over $1.00 to any of them right now.
20% to 30% increases in reinforcing steel costs since December. 10 to 15% in concrete. Some PVC Pipe and fittings are up over 50%!!
We’ve lost most of our domestic capacity to manufacture a lot of materials, so it won’t improve until the lockdowns in China end. While they continue to pursue zero-Covid, Chinese factories are empty and ships are stuck offshore wondering when they might get loaded again.
So, right now the Chinese companies produce 30% less but are earning the same money as before?
From a building cost (materials perspective) it is here to stay for the next 12-36 months at minimum.
Source: My opinion based on my job and research.
Even if it drops, you won't see the benefit straight away until the builders start to compete against each other, they are more inclined to only decrease slowly if others are not dropping prices, bank that marrgginnnnn brahh. As more fold, less competition in the market.
immigration wont help supply problems
Steel timber etc all up by heaps
No material prices aren't going down in the feasible future in fact all indications are they are going to keep on rising.
LVL timber went up 70% over 12 months, its going up a further 35% over the next 3 months, in short this is because of the Russian war.
Pine prices will go up soon too because there is less global supply of baltic pine due to the Russian war, Australian timber mills are already running at capacity so we will just have to pay more than particularly America to receive sufficient stock.
Steel to keep rising, that Ukrainian steel plant that was obliterated by Russian bombs was the largest steel producer in Europe.
Wage costs to rise as low unemployment and high inflation means everyone will be putting their hand out for more coin.
In saying all that if Metricon go bust it will have a catastrophic impact on the industry, they will bring down a lot of suppliers and subcontractors with them.
Fuel prices up are going to massively impact imports as well as the $ dropping against the USD.
In the industry, build our own homes. Don't see much relief coming in the short and medium term. If it's not urgent, i wouldn't be building or signing a contract to build right now. We have sites running but contracts were signed in 2020 so we are still good, our builder could lock prices in early as well. Builders are still dropping like flies and the surviving ones are charging top dollars (understandably) for jobs.
Speaking to a customer who is in the roofing industry and he said not only are materials continuing to go up, but the major issue is lack of employees. Many have left and not replaced, so whilst he can make product, can't find installers.
Container freight has started to cool a but but still paying 6000 to 8000 for an FCL that cost under 2000 pre pandemic.
Oil price meaning all transport is charging fuel surcharges, which then on top of base RM cost increase is causing substantial increases.
Ukrainian war and the loss of the largest steel plant in Europe just making it worse..iron ore on way up, only thing holding it back from larger increases are the Chinese lockdowns and subsequent demand drop last few weeks. When the do come back expect ore to return to $150/tonne or more.
We are expecting no price drops in next 12 months and expecting further increases.
The commercial construction company I work for is booked for the next 3 years and are turning away work daily. I have no idea what happened over covid buts it is like a money printer was put into the pockets of our high worth clients….