Homeowners planning to renovate may have to wait until next year to get their projects started and risk paying a premium, as the shortage of skilled tradies looks set to worsen amid surging demand for renovations and new detached homes.
An analysis of 252 residential building companies by the Association of Professional Builders (APB) has found members have been signing contracts at record levels the past six months and many are booked out for the next two years.
“We’re finding that a lot of our members are already fully booked until the end of 2021, and some until 2022, whereas this time last year, they might have only been booked a month or two in advance, and they were always chasing the next bit of work to plug the gaps,” APB founder Russ Stephens said.
“The housing stimulus has created more demand than ever, it’s absolutely unprecedented. Builders are all fighting over a limited number of subcontractors and now more worried about securing enough tradies to deliver the projects, than winning more work.”
Adelaide custom homebuilder Stannard Family Homes director Ryan Stannard said they have to take on more staff to cope with the extra work, including an additional supervisor.
“It’s going nuts. The only thing that can stop it at the moment is the government lockdowns,” he said.
But there may not be enough tradies to go around.
The Housing Industry Association Trades Availability report for the December quarter showed the index dropping to -0.35, indicating a shift to a significant shortfall of skilled labour across all states and territories amid the large flow of work entering the pipeline.
This comes as renovation activity across the country is expected to hit its highest level in 20 years. HIA forecasts renovation projects to jump by 3 per cent between 2020 and 2021 to reach $38.6 billion.
“All indications are that this will continue into 2021 as international travel is not expected to return until at least 2022,” said Tim Reardon, HIA chief economist.
While the cost of skilled tradies is yet to fully reflect this tightening market, the lack of competition will drive building and renovation costs higher says Marty Sadlier, MCG Quantity Surveyors director.
“On average, we’re seeing a 10 to 15 per cent increase in renovation costs,” he said.
“The largest issue at the moment is the prolonged timeframe for works to commence and scarcity of the tradies. The demand is far too high.”
It’s an issue Sydney homeowner Jo Freeman experienced first hand. She was hoping to get a simple backyard upgrade within two weeks, instead, it took her three months just to find tradies and paid more than she expected.
“I called all the tradies recommended to me and anyone I could find online, but only four came around, who then quoted me $25,000 to $30,000 to do the paving and install a garden bed. I never heard back from them again,” she said.
She eventually found someone who charged her $18,000 for the labour alone. Now she’s worried about embarking on a bigger renovation. “I’m freaking out about my bigger renovation, because I plan to gut my terrace and install a new staircase. I’m worried that I can’t get good builders to do it within my budget,” she said.
“I get the feeling that builders don’t like doing renovations at the moment and they prefer to build a new home.
“The $800,000 they’re quoting is also exorbitant,” she continued, referring to the quotes she has received for the work on the terrace and building a new staircase.
The lack of tradies was also a challenge for Perth-based investor Catherine Lezer.
After buying a 1974 house in Kalamunda, WA, in February last year, she hoped to get the property renovated and listed for sale by September. Instead, it took her a year to get the renovation completed.
“Waiting for the plumber was the biggest hurdle for the renovation moving smoothly,” Ms Lezer said.
“We didn’t finish until the end of December, and a few items were further delayed, meaning the property wasn’t ready until February this year. COVID-19 takes some of the blame, as does supply issues, but the biggest cause of the delay was waiting for tradies.”
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