The building industry’s profit-less boom

The building industry's profit-less boom

The profit-less boom. That’s what our industry bodies are telling us the building and construction industry is currently facing. In the last few months, we have started experiencing major supply issues and are constantly being notified from our suppliers about impending price hikes. There are a few factors that have contributed to the conditions we’re facing.

Firstly, we saw an unprecedented uptake of the Government’s HomeBuilder program, followed by an influx of residents from interstate as well as continued low interest rates. Secondly, the number of natural disaster insurance repairs have seen contractors tied up on other jobs. There’s also been a back log of work due to the wet summer months and a continued supply chain disruptions due to COVID-19. We’re also told by a large number of our own clients that they are choosing to spend what would have been their holiday budget, on doing up their homes (if you’re stuck at home, why not make it a place you actually love?!).

So what does this mean for the industry, and what does it mean for Nyblad Construction? Supply issues are causing costly delays to the majority of builders in Queensland. As an industry, most builders operate by providing clients with fixed price contracts. The supply cost increases means that many builders are beginning projects that were signed off last year, with the sober knowledge that they are at best going to break even.

For us here at Nyblad Construction we are in a more fortunate position than some new home builders in that we undertake more, but smaller, projects throughout the year. This means we can account for price increases to a certain degree, however, we have had to reduce the number of days our quotes are valid for in order to lock in prices with our suppliers. As for the supply delays, we are doing our best to source materials early in the process to ensure our projects continue to work to schedule.

Master Builders Queensland has kindly provided us with a general letter to the public regarding the challenges the industry is facing available below or you can download here.