07/07/2014 - 14:04

Builders innovate to tackle house costs

07/07/2014 - 14:04


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The state’s biggest home builders are innovating to tackle Perth’s housing affordability issues, but they say alternative construction methods are only part of the solution.

Builders innovate to tackle house costs
NEED FOR SPEED: Kelvin Ryan says builders need to find a way to get houses on site quicker. Photo: Attila Csaszar

The state’s biggest home builders are innovating to tackle Perth’s housing affordability issues, but they say alternative construction methods are only part of the solution.

Western Australia’s biggest home builder is seeking to ramp-up its modular product offering in an effort to relieve affordability pressures by reducing build times.

BGC Residential chief executive Kelvin Ryan said Perth’s housing affordability issues were being exacerbated by a land supply shortage, with prospective purchasers having to wait between six and nine months after buying a block to start building.

Taking into account the time it takes to build a house using conventional double brick construction, it can be up to two years before home buyers can get into their new house.

“At the first home buyer end, they can’t wait that long,” Mr Ryan told Business News.

“So we’ve turned our mind to how we can get houses built quicker, and of course one of the ways to do that is modular construction, where you can have a house on site within three weeks.”

Mr Ryan said while he didn’t expect modular construction methods to replace double brick as the dominant style of housing, he believes up to 5 per cent of all homes in Perth could be built that way.

During the past year, BGC has delivered 10 modular-constructed homes in Shorehaven, while also rolling out a further 22 in Banksia Grove.

“We think there is a market for 1,000 homes per year, and we’d like to build 500 of them,” Mr Ryan said.

“The biggest single challenge is getting people over the fact that it’s not a double brick-constructed house, because that’s what people like.”

Mr Ryan said BGC’s recently-signed joint venture agreement with Victorian mega-builder Metricon, which specialises in framed construction rather than double brick, would assist in rolling out alternative building methods in WA.

“One of the problems in implementing framed housing or any other alternative building technology in Perth is there is no builder of size that has the experience doing it,” he said.

“We’re hoping to lever off of some of their expertise. It’s not that complex to do; it’s just that no-one has that track record.”

However, chief executive of the state’s second biggest homebuilder, ABN Group’s Dale Alcock, said alternative construction methods would not be the panacea to the housing affordability crisis.

Mr Alcock said there was a raft of issues that needed to be addressed before housing form and construction methods were considered.

He said the main drivers of the increased cost of housing in Perth were delays in the approvals process, particularly for environmental and engineering approvals, increases in the landfill levy, as well as the state government’s increases in land tax and developer contribution schemes, which alone add about $20,000 to the cost of a single lot.

“People say ‘build it out of something else, that will make it cheaper’, but the reality is it’s all of the inputs in and around getting the block of land created and serviced and infrastructure provision and the takeout of the developers’ contribution element,” Mr Alcock told Business News.

“There’s some low-hanging fruit that we should be able to pick up to make this industry far more efficient and effective and they are just some simple examples.”

Mr Alcock said builders had been particularly innovative over the past five years in terms of the diversity of housing choice available in the market.

“Some of the issues around the innovation of the product are being forced on us by the lot size reducing, so we’re having to work on different ways of constructing and using different materials because of the shape and size of the lots that are there,” he said.

JWH Group managing director Julian Walter agreed that shrinking lot sizes and the reduction in home sizes were the main drivers of innovation in the home building space.

 “We’re doing a lot more 3x1s and 2x1s, that sort of thing,” Mr Walter said.

“The ultimate problem with all of that stuff is the WA market is still a little bit demanding in what it wants.

“The cost of land is absolutely one issue, but the other one is perception.

“We need to change the mindset of mainly first-time buyers to go back to smaller homes.”

LWP Property Group managing director Danny Murphy said he expected terrace and cottage-style home sites would continue to gain popularity as the affordability issues continued.

“With the growing challenge of affordability, development of more compact, yet appealing housing needs to continue,” he said.


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