Tradie deficit threatens housing boom

July 24, 2015

A growing shortfall of building tradesmen in NSW is sending new housing costs surging upwards and blowing out construction times, according to veteran Sydney housing developer Peter Icklow.

Mr Icklow, who runs Monarch Investments Group, warned that the battle among developers and builders to secure skilled labour was intensifying and could send some builders broke, derail the current housing boom and make a joke of Premier Mike Baird’s ambitions to build 640,000 new homes by 2031.

Mr Icklow said the cost to build the remaining 70 of 352 homes at Monarch’s $158 million Ingleburn Gardens Estate in Sydney’s outer south-west had risen 20 per cent over the past six months, and the time taken to complete a home had increased from five months to eight or nine months over this time.

“We are finding that tradies are bidding builders and developers against each other to obtain the best price for their services,” he said.

“Every developer building houses in NSW is experiencing this. The worst trade is bricklayers. We were offering them $1 a brick, then it went up to $1.50. Now it’s up to $1.80 or they go elsewhere.”

Another western Sydney-based builder who asked not to be named said: “Builders are paying extraordinary amounts of money to bricklayers just to get the job done so they can get their progress payments and have some cash flow – even if it means losing money.”

Data tracked by the two peak housing industry bodies, Master Builders Australia and the Housing Industry Association (HIA) – which this week ranked NSW as the premier homcbuilding state, above WA – confirms a growing shortfall of skilled tradesmen in Sydney and regional NSW. The Junequarter Master Builders National Survey of Building & Construction found that it had become harder to access skjlled labour across ^ key building trades.

“The results of the survey show builders having difficulty finding higher-skilled workers like site managers, foremen, supervisors and project managers, as well as some of the trades, particularly carpenters and bricklayers, and, increasingly, tilers and concreters,” said .

MBA chief economist Peter Jones, “Residential building is one of the few bright spots in the economy and NSW has been the standout performer, Master Builders is concerned that the emerging skills gap could cull the strength of resurgent building activity.”

HIA chief economist Harley Dale said its latest internal quarterly figures showed without doubt that the availability of skilled tradespeople has tightened considerably in Sydney and in regional NSW as the housing construction boom continues.

He said the trades worst-affected were bricklaying, carpentry, ceramic tiling and plastering. “Since about [the] middle of 2013, we have moved from a situation where there was a modest surplus of skilled labour in NSW to where there is now a net shortage, and it’s deteriorating,” Mr Dale said.

He stopped short of saying this could derail the housing boom, but said it could constrain it Kim Hawtrey, a director at building forecaster BIS Shrapnel, said a shortage of tradies was looming, and while not yet critical, was “starting to bite”.

“Apart from the anecdotal evidence, ABS data over the past year shows a pick-up in wages growth for construction workers, which is an indicator that things are tightening up,” Mr Hawtrey said.

“It doesn’t have to become critical if we address the labour supply and training supply issues over the longer term. In the short term, we can bring in people from other states and from New Zealand, plus you will get people transferring over from the mining boom, which will help.”

Urban Development Institute of Australia NSW chief executive Stephen Albin said labour pressures were also being felt by its members. “We need to get young people entering the industry,” Mr Albin said. “The state government is aware of this, but there needs to be no more prevarication.”

NSW Minister for Skills John Barilaro said encouraging more skilled students into trades and apprenticeships was a priority, with $2 billion set, aside for TAFE, a $122 million increase compared to last year.

Property observed p37 Forza bUYS emptv Brisbane office tower p39 Gold Coast vacancy rates match Sydney’s p43 Sales wrap P44

Increase in building trade costs over past 6 months (%) Site preparation Electrical Survey Engineers Driveways Landscaping Fascia & gutters Carpenter Plumber Bricklayer Concretor Frames/trusses Roof tiler Painting

Caption Text:
Peter Icklow says costs and construction times are up. PHOTO: LOUISE KENNERLEY

Australian Financial Review