HomeBuilder: Delays for new home builders expected as demand surges

Australians building a new home or renovating could face long delays as busy builders deal with soaring demand and shortages of building supplies and skilled trades.

The problem is set to get worse before it gets better, with 130,000 new builds expected to start this year alone, the Housing Industry Association predicts.

Residential building has surged in recent months as house and land package buyers rushed in to benefit from the federal government’s HomeBuilder grants that finished at the end of March, HIA chief economist Tim Reardon said.

“Officially, we won’t know the figures for March until next week but we’re expecting it to be one of the biggest months on record,” Mr Reardon said. “It won’t surpass the result last December but it will be big.”

The latest figures from federal Treasury show there were 75,256 applications for new home builds up to March 12 across the country. It was initially designed to build 30,000 homes by last Christmas before being extended.

There have been an extra 15,493 applications since December 31, even though the grant dropped from $25,000 to $15,000 this calendar year.

There have been 18,147 applications for major renovation projects overall — an extra 2767 applications since the end of last year. 

Builders on the ground are already having trouble starting or completing builds on time, with 82 per cent reporting delays in getting building supplies or access to qualified tradies, HIA research showed.

Separately, results from a Master Builders Australia survey showed 78 per cent of builders faced a three-week delay for key trades.

“Different regions are facing different challenges but they are all facing impediments to the number of homes they can start construction on,” the HIA’s Mr Reardon said. “There’s really three constraints and they are land, labour and lumber.”

About 20 per cent of the timber used to build homes in Australia is sourced overseas and the pandemic had interrupted its production. This has led to fierce competition for supplies, with other countries seeing delays in this and other building materials.

Mr Reardon said the problem would get worse as the tens of thousands of people who had signed up to build, looked to get their projects started in time to qualify for HomeBuilder.

Australia’s largest home-building company Metricon agreed there would be difficulties once the surging number of builds began.

Especially since across the country, dwelling build approvals were up by 20 per cent year on year in Victoria, NSW, Queensland and South Australia.

“As an industry it’s certainly going to be challenging when the work does hit the field,” Metricon building and operations general manager Peter Temopoulos told Domain.

While other builders had reported shortages in supply, major builders such as Metricon were able to source what they needed, learning from the boom the industry had in 2017.

“We’re pretty well placed to deal with it,” Mr Temopoulos said.

It’s a huge challenge for builders like Jamie Leeks, who is expecting to build more than 40 homes this year on Russell Island in Queensland, about 45 minutes from Brisbane.

A lack of building supplies like timber were delaying his ability to start or complete projects.

Before COVID-19, timber orders had usually taken three weeks, which had since had blown out to 16-20 weeks.

“The island has its own challenges,” Mr Leeks said. “The lead times with barges are exhausted at the moment and it makes it hard to organise the [building material] delivery schedule.”

A lack of trades including roofers was also causing some delays, he said.

Metricon are supporting calls from Master Builders Australia for the Federal Government to lengthen the amount of time required to start a build so people can still qualify for their HomeBuilder grant. 

Under current requirements, builds must start within six months of signing a sales contract.

MBA chief executive Denita Wawn said more needed to be done to manage the huge demand placed on builders, who just 12 months ago were facing thousands of job losses without HomeBuilder.

“Given the overwhelming demand that HomeBuilder has generated we now think that the commencement deadline is redundant, that it should be extended to ease pressure on the supply chain,” Ms Wawn said. “We have made the federal Minister for Housing aware of our position.”