The property market has been seeing a boom lately and the cost of construction is booming right along with it. The skills shortage and cost of labor are one part of the equation but rising material cost are also playing a part. Sydney has been leading the way and Brisbane is also starting to see prices rise as well. Builders and subcontractors here are able to negotiate higher prices since there is a higher demand for their skills and services.
The growing property market and construction costs
Special skills are in short supply and there is beginning to be talk about programs to train more skilled laborers. The cost of laying brick has gone up around 30-50 percent because bricklayers are in short supply. Some regions are brighter than others and have even been drawing resources away from other sectors of the economy. Workers have been flocking to NSW for the construction boom while a lack of work has left TAS, SA, and ACT out in the cold.
Australia’s property market as a whole has been predicted to rise 3.6 percent in prices this year and rise up to 3.8 percent next year. Areas like QLD will rise 4 percent this year and even more next year while ACT will only increase 1.5 percent this year. TAS will also see a 1.5 percent rise in prices this year, only a slight increase from 1 percent last year.
The growing residential property market has been great for wage increases in the construction sector but other areas of the economy have not been keeping up. Health and education construction projects have not stayed on pace with the residential sector and that is showing itself in the prices that subcontractors can charge. Subcontractors still have a very competitive market to work in. Those subcontractors that are not working on residential projects are having to fight a lot harder for the work they get.
The rise in the property market for Australians has been great for home prices and the construction crews’ wages that build them. The booming sector is likely to continue to keep growing and increasing even more so that is great news for the Australian economy as a whole. There are still some sectors and regions within construction that need to catch up but the increase in wages and prices are a great base to build on in the years to come.