At Zee Builders, we believe that our clients have the right to make informed decisions for their family when constructing a new home. This is especially critical over the next few year as the residential construction industry in Australia faces unprecedented challenges. A perfect storm of economic issues is quickly coming to a head that could have significant impacts on consumers looking to purchase or construct new homes.
To make matters worse, the Australian housing market is already experiencing a major shortage of homes. According to the Australian Housing and Urban Research Institute, there is a shortage of over 170,000 affordable homes across the country. To solve this problem, the residential construction industry needs to build more homes.
The challenge is that factors such as rising interest rates, material and labour shortages, and rampant inflation are rapidly deteriorating the growth needed in the sector.
- Rising Inflation – According to the Reserve Bank of Australia, the national inflation rate is 7.8% increasing the cost of building materials and labour needed to construct new homes. While inflation has cooled slightly, it’s expected to run higher than normal for the next year or two. This is driving up the costs of building materials and labour.
- Higher Interest Rates – Interest rates have risen sharply and are expected to exceed 4% this year making it more expensive to secure loans to build new houses. According to the Housing Industry Association (HAI), lending for the purchase or construction of new homes has fallen to the lowest level in over a decade.
- Labour and Supply Chain Shortages – The global economy is still struggling to keep up with renewed demand for construction and raw materials following the COVID-19 pandemic. Also the construction industry in Australia is facing a labour shortage as unfilled roles have increased by 80 percent in the last few years. This will inevitably lead to project delays.
- Government and External Factors – In addition, there are external factors that have impacted the construction industry including lockdowns from the pandemic, disruption to supply and demand in the market from a flood of government grants, and an energy crisis as a result of the war in Ukraine.
All of these factors combined have already started impacting builders. In 2022, the construction industry built approximately 120,000 detached residential homes. By next year, that number is expected to dip below 100,000 for the first time in a decade. So far, this has resulted in over a dozen major builders’ businesses to collapse.
As the situation continues to get worse, this will leave thousands of families in housing and financial limbo. Fortunately, despite everything that is going on, it is possible to move forward and build the home of your dreams. Here are some helpful tips to find the right home builder in your area in 2023.
Qualities to Look for in a Builder
While no one can predict the future, there are some key qualities that can give you the confidence to find a builder who is highly qualified and reliable during these difficult economic times. To find a great builder, they should have the following qualities:
- Fully-Licensed and Insured – You never want to work with a contractor who isn’t qualified to complete the work or doesn’t carry the appropriate liability insurance.
- Reasonable Project Loads – Builders that take on too many projects at once are more likely to fall behind schedule.
- Detailed Quotes – Builders who are willing and able to provide detailed quotes will help you avoid hidden costs. Don’t accept a total price to complete the build.
- Inclusions and Exclusions – Find a builder who clearly outlines what work is included and excluded in the price to avoid any surprises.
- Interaction with Subject Matter Experts – Most large construction companies have a team of salespeople who claim to be “experts”. They’ll make lots of promises and will disappear once the contract is signed. It’s best to have some interaction with the actual builder up front in the process.
- Transparency – Don’t fall for fancy marketing techniques. If the offer feels too good to be true, it probably is. You want a builder who is going to be honest and straightforward about the process, costs, and timelines. Word of mouth from other customers is a great way to judge a builder’s integrity.
Questions to Ask When Selecting a Builder
Choosing the wrong builder to construct your home can lead to major headaches and financial costs. It’s always important to take the time to carefully evaluate the builder for your project before signing any contracts. Here are some simple questions that can help you better understand their capabilities and the process.
- What happens after we sign the contract?
- What are my responsibilities as the owner?
- What steps need to be completed before we start construction?
- How will you escalate issues or concerns that might arise during the project?
- How long will the build take?
- How often will I receive updates on the construction progress?
Questions like these can help you feel comfortable that you have selected the right builder. For example, there is a lot of uncertainty right now about build times considering the labour and material shortages. If the builder is willing to be open and honest with you from the beginning, it’s a good indication that you have selected a builder who has your best interests in mind.
Why Smaller Niche Builders are the Right Choice in 2023
Bigger isn’t always better when it comes to selecting a builder. While larger builders may have an impressive portfolio of past projects and seemingly unlimited resources, they come with their own challenges. In today’s environment, smaller, niche builders have an advantage and can deliver their clients more value and transparency.
- Lower Overhead – Large organizations have massive amounts of overhead that usually gets passed along to their clients. Smaller builders have the advantage of operating the same service at a lower cost which is especially important with inflation and interest rates driving up the cost of construction.
- You’re the Priority – Niche builders typically take on a limited number of projects, so you are the priority rather than just a number.
- Custom Experience and Flexibility – Larger builders often have standardized processes and experiences for all of their projects. With a smaller builder, they have the flexibility to customize the experience and results to fit your needs.
At Zee Builders, we’re dedicated to providing our clients with a personalized and transparent home building experience. With over 7 years of experience in the industry and more than 1,000 projects successfully completed, our team can help with any project from start to finish. Let us help you navigate the challenging home building environment and get your project done right. Contact us today to find out how we can help with home designs, custom builds, and knockdown rebuilds.