Inflation sparks housing supply pressure

Rising construction costs, lack of trade and immigration delinquencies are fueling the housing deficit, experts say.

Tying the scenarios together is that Australian headline inflation jumped to 6.1% in the June quarter, the highest in 20 years.

According to the co-founder of BuyersBuyers, the cost of renovating and building new homes has skyrocketed due to federal stimulus for HomeBuilder, extremely high demand for trade and materials, and a shortage of supply.

“The latest inflation rate confirms that the producer price index for the housing construction sector will deteriorate significantly,” Wargent said.

He estimates that the cost of building new homes has surged by as much as 30%, and the projected bankruptcy rise in construction is likely to cause projects to be canceled or scrapped entirely.

The warning accompanies well-known outfit Metricon, which has announced it will cut nearly 9 percent of the 2,500 staff it employs on Australia’s east coast.

Acting Chief Executive Peter Langfelder said the restructuring was primarily about sales and marketing rather than the core business.

However, the move follows recent demise of Queensland firms Condev and Probuild, among others.

According to the Australian Bureau of Statistics, overall prices for building materials will rise by 12% in 2021, the fastest annual increase since 1981.

According to the Master Builders Association, timber is up 39% and steel is up 37%, and supply chain disruptions are destined to continue.

For more than a year, construction firms have been grappling with inflation more than double headline levels, chief executive Denita Wawn said.

“This is what consumers are feeling, whose purchasing power to build new homes has dropped significantly,” she said.

But Wargent says the pressure will inevitably grow, not just for those who want to build.

“This has implications for potential shortages of housing as immigration increases over the next 12 months,” he said.

Another consideration is that rental price inflation is just beginning to emerge.

“The official inflation rate measures actual rents across the market, rather than asking for rents, and rents have skyrocketed over the past year, causing a lag in the official data,” Wargent said. Stated.

Inflation sparks housing supply pressure

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