It is early days since the Federal Government and State Government have announced their various stimulus measures. Subsequently it may seem premature to be discussing price hikes, however, with a strong inquiry for land, it is hard not to be concerned about increasing prices. Especially on new builds – is this new building – building a home – just clarify for the layman)
We are only a few days in so why am I concerned?
Project builders make up the vast majority of the home building market in WA. Multiple brands give the customer the illusion of choice, although everyone ends up in the same bucket. The top 6 builders own most of the brands. They mostly target the first home buyer market. New builds, in new estates, with minimal changes is what they do best. When you consider the magnitude of the state government and federal government incentives, this means they are likely to become very busy.
My experience of working for some of the largest project builders in Perth for 15 years has given me a strong insight into the industry. While breakthroughs in modern technology have transformed our lives in other ways, they have done little to improve productivity in the Perth Building Industry overall. You only need to look at WA’s failure to meet the new energy efficiency regulations as evidence of how it struggles to deal with change.
When they have adopted new technology it often fails to deliver. It is not used or implemented correctly. While they truly believe and declare they are innovative, the challenge of increasing workload tends to have two solutions:
1/ Hiring more people
2/ Hiring people overseas
Over the past 5 years, the building industry has been contracting every year. Larger building companies with large fixed overheads like offices and corporate management teams have been forced to reduce staffing levels. As a result, many departments are at full capacity already.
With the new incentives only lasting for 6-9 months there is going to be a lot of pressure on productivity and trying to create contracts. This means increasing capacity without affecting the quality and accuracy of the contracts.
In addition to this, there is the added complication that finance is taking longer, and this increases the fall over-rate which in turn suggests builders could be working half of the time on contracts that do not make it to site. It is no wonder the larger builders are urging people to sign up now!!
At Piran Property Group we are advising people to proceeded with drawings and approvals. Having approved plans and documentation ready not only allows you more time to select the right builder but puts you in control. By doing this, you remove the risk of potential price rises and delays.
Contact us today and turn our experience into your advantage.
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