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Local businesses are seeing reduced demand for their services and an increasing number of projects are being put on hold or cancelled.
photo: 123 RF
One in five construction workers is working at less than 50 per cent productivity as work tapers off, with most expecting the situation to get worse over the next year, a new survey has revealed.
The EBOSS Builder Sentiment Report surveyed 650 local businesses, with 70% believing industry conditions will continue to decline over the next 12 months.
About the same number of businesses have seen demand for their services fall, with an increasing number of projects being put on hold or cancelled altogether, with small businesses and the self-employed being hit hardest.
Matthew Duder, managing director of architectural consultancy EBOSS, told Checkpoints The report confirmed what he was seeing in building permit numbers and anecdotal reports.
“Starts are down 64 per cent on last year and project enquiries are down by about the same amount. One concern for builders is that they are finding it difficult to schedule work and therefore margins are slim,” Dude said.
He said it was a great opportunity for anyone considering renovating or building a new home in the next 12 months.
“You can find the architects and builders you want, the prices of our building products are stable, the labour force is very competitive and with interest rates expected to go down, I think the key message here is that this capacity is something we haven’t seen in the last five years,” he said.
“I think if people are already in their homes and want to add value, the renovation market could definitely benefit from having good, capable people in place, and prices could be like we haven’t seen in the last few years.”
However, there are still challenges for construction companies.
“The report tells us that it will be challenging to maintain building construction business over the next 12 months,” he said.
Dude said the construction industry has seen a significant increase in the cost of building materials over the past two and a half years.
“It will be more difficult to maintain margins over the past 12 months. Some will be looking for better prices to meet market demand over the next 12 months,” he said.
He said all the studies he had seen on profit margins in the construction industry had consistently shown them to be low.
“I don’t want to speculate that there was price gouging in the past period when demand was high. Going forward, people will be able to get the jobs they want when they want them, so I think that’s good news for people who have been waiting on the sidelines,” he said.
Mr Dudley said there should be some detail to look into concerns expressed about the government’s willingness to accept overseas certification for certain building products.
“Overall, the feedback we’ve gotten from builders and actually the architects we’ve spoken to is that they do support the possibility of opening up the supply chain.
“However, there were details that needed to be considered and the feedback was ‘let’s consider lights and tiles differently to cladding and structural elements, so some of the lower performance elements like taps and toilets might be suitable for a lower degree of scrutiny than windows or weatherboards.’”
He said the government’s new proposals for senior housing were a vote of confidence in the industry.
“I think the government will take this very seriously because the industry is actually also saying, look, we support this idea and we do think we have the capability to provide approval and compliance services without needing parliamentary approval.
“I think it’s a vote of confidence in the industry that they are prepared to find innovative solutions that are actually definitely going to lead to more jobs.”
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