Industry-wide cost pressures mount

Homebuilders in Western Australia are facing rising input costs, created by a shortage of skilled labour and increased regulatory compliance.

Despite a softening in the local housing market, which has eased demand for bricklayers in recent months, the finishing trades – including painters and tilers – remain difficult to source.

Non-trades roles are also hard to fill, according to Pindan Group managing director George Allingame.

“There’s huge competition for people. I think the trades have eased a little bit because the housing market is slowing, but trying to get contract administrators, really good site managers and estimators, is just impossible,” Mr Allingame said.

The Building and Construction Industry Training Fund, set up in 1990, has been widely recognised as a successful model in boosting numbers in the building trades.

Yet the state’s mining industry continues to compete for graduates of the scheme, which itself isn’t sufficient to meet the labour gap.

“We’re not training enough tradesmen, and even though we’re doing all sorts of things to try and get kids into the industry, it’s still a really big problem,” Mr Allingame said.

“I think we really have to press the government to have some sort of workers’ scheme, because as the baby boomers fade out from the trades, we’re not going to replace them.”

Cost pressure is also being created by new industry regulations and more sophisticated building requirements.

The second stage of the five-star green star building policy – which covers measures such as water harvesting and solar power – was recently introduced, adding an estimated $7,000 to the cost of building a house, according to the Master Builders Association of WA.

Consumer demand for discretionary fixtures is also having an impact.

JWH Group managing director Julian Walter said the level of specification required on an average house had risen substantially.

“A house of 100 square metres [in size] has now gone to 120sqm. Instead of having one row of tiles, you’ve now got eight to 10. Instead of having just a simple stainless steel trough and simple basin, we’ve now got mixer taps,” he said.

“Materials and labour [costs] have both gone up, then the quantum of [material] that’s going in has gone up as well.”

However, the extra cost of materials has been partly absorbed by a levelling-off in labour costs, according to Peter Stannard Homes managing director, Peter Stannard.

“Where there’s been provision made for increases [in labour costs], the labour has stabilised and the money that was put in for increases has gone into materials, so that has stabilised costs in the last four to five months,” Mr Stannard said.

New regulations set to be introduced by Main Roads are also expected to put increased pressure on costs by reducing the amount of bulky materials able to be carried by trucks.

Under the amended permit system, trucks that transport materials used in residential construction will have to be reconfigured to reduce their size and carrying capacity by 20 per cent.

Alcock Brown-Neaves Group managing director Dale Alcock said the cost of the changes would ultimately be borne by consumers.

“It really causes an issue with housing affordability. Also, if you reduce the load carrying capacity [of trucks] by 20 per cent, you’ll need 20 per cent more trucks and drivers, and have higher fuel costs,” Mr Alcock said.