How to combat the shortage of tradespeople
The Housing Industry Association (HIA) says the shortage of skilled tradespeople is “the most significant shortage on record”.
“All trades recorded a deterioration in availability during the December 2021 quarter. Bricklaying, carpentry, joinery, roofing, general building and other trades have reported the most severe shortages on record,” HIA Economist Angela Lillicrap says.
She explains the shortage is due to a boom in detached house construction and renovations, which has “seen demand for land, labour and materials skyrocket”.
The result, according to the HIA, is that construction timeframes are being pushed out.
And there may be no immediate relief in sight. Skilled trades are expected to be in high demand throughout 2022 and into 2023.
Construction costs rise 7.3 per cent
The challenge facing home builders and anyone planning even a minor home improvement goes beyond a tight supply of tradespeople from all areas of construction.
The latest Cordell Construction Cost Index shows construction costs nationally increased 7.3 per cent last year, the highest annual hike since March 2005.
The cost spike is being driven by increased demand plus pandemic-related supply chain disruptions leading to a severe shortage of materials.
Rising building costs coupled with a shortage of tradies could affect your building project. That doesn’t mean you should scrap plans, but it does pay to be prepared:
- Before signing a building contract, check how the builder can pass on any cost blow-outs.
- Speak to your builder about realistic construction timeframes.
- For DIY projects, allow room in your budget for unexpected cost increases.
Importantly, talk to your mortgage broker about finance options to pay for a new build or renovations.
If you’re planning a new home, a construction loan can be a suitable form of funding.
What are construction loans?
Construction loans, also known as owner-builder loans, are different from regular home loans, due to building works requiring ongoing payments as the construction progresses, according to Mortgage Choice.
In the case of a traditional home loan, the totality of funds will be made available in a single lump sum, while a construction loan lets borrowers draw on the loan balance when payments need to be made to the builder. These payments are made at key stages of the building process and are known as progress payments.
If you’re giving your place a makeover, it may be possible to draw on the home equity you’ve built up through a loan top-up or refinancing – it can be a way of preserving personal savings.
The main point is to head into any sort of building project with your eyes wide open. Speak to your mortgage broker to know the finance options available to help you get started on your project.