Navigating the Skilled Trades Shortage: Rising Costs and Construction Delays in 2024

The Housing Industry Association (HIA) continues to highlight the significant shortage of skilled tradespeople in Australia, describing it as “the most significant shortage on record.”

Current Market Position

According to HIA Economist Angela Lillicrap, all trades have experienced a decline in availability. Bricklaying, carpentry, joinery, roofing, general building, and other trades are facing severe shortages. This shortage is driven by a surge in detached house construction and renovations, which has led to skyrocketing demand for land, labour, and materials.

As a result, construction timeframes are being extended, and there is no immediate relief in sight. The demand for skilled trades is expected to remain high throughout 2024 and beyond¹.

Rising Construction Costs

The challenge for home builders and those planning home improvements extends beyond the shortage of tradespeople. The latest data shows that construction costs have continued to rise. The Cordell Construction Cost Index indicates a national increase of 7.3% last year, the highest annual hike since March 2005². This spike is driven by increased demand and supply chain disruptions, leading to a severe shortage of materials.

Be Prepared

Rising building costs and a shortage of tradies could impact your building project. Here are some tips to help you prepare:

• Check Contracts: Before signing a building contract, ensure you understand how the builder can pass on any cost blow-outs.
• Realistic Timeframes: Discuss realistic construction timeframes with your builder.
• Budget for Increases: For DIY projects, allow room in your budget for unexpected cost increases.

Finance Options

It’s crucial to talk to your mortgage broker about finance options for new builds or renovations. Construction loans, also known as owner-builder loans, differ from regular home loans. They provide funds in stages as construction progresses, known as progress payments³.

For home makeovers, you might be able to draw on your home equity through a loan top-up or refinancing, which can help preserve personal savings.

The key is to approach any building project with your eyes wide open. Speak to your mortgage broker to understand the finance options available to help you get started on your project.