Latest ABS figures sound alarm on addressing constraints in housing sector

This week’s consumer price (CPI) and producer price indexes (PPI) are another reminder to urgently address the supply-side cost pressures in the market for building and construction says Master Builders Australia CEO Denita Wawn.

The annual rate of inflation accelerated to 7.3 per cent during the September 2022 quarter, the fastest pace of price growth since 1990. This has been accelerated by new home prices as one of the main reasons the overall rate of inflation worsened.

“The severe cost pressures in the sector for building materials and skilled labour is driving the increase in new home prices,” said Ms Wawn.

“Today’s PPI figures show that the cost of home building materials rose by 16.0 per cent over the year to September, one of the strongest increases since the 1970s. Cost pressures are particularly acute in the market for timber, steel and other metals. However, there are some tentative signs that cost pressures may have eased slightly.

Tuesday’s budget anticipates that the inflation rate will peak at 7.75 per cent later this year.
“Housing policies must work to reduce the cost of creating new homes to keep up with pent-up demand.
“The building and construction industry continues to be frustrated with lengthy delays in approvals for land title, development and building applications, and occupation certificates. Shortage of land in the right places, high developer charges, and inflexible planning laws also restrict opportunities to meet the housing needs of our future.

“The Housing Accord announced earlier this week is a step in the right direction in acknowledging supply-side barriers such as red tape and lengthy approval times and charges, and will hopefully have federal, state and territory and local governments around the same table to start tackling them.
“Master Builders is calling on all levels of government to action these challenges and not wait until 2024,” Ms Wawn said.

Master Builders also urges caution to the Government following the introduction of the IR omnibus bill yesterday to consider the inflationary impacts and added cost layers to businesses in the industry.
“At a time where builders and small sub-contractors are already struggling with a long list of economic pressures, including material supply and labour shortages, this Bill will only make things worse and risks undermining national economic prosperity and future job creation.

“The Government must resist the temptation to pursue industrial relations policies that will have an adverse effect on low unemployment, productivity and impact real wages in the long-term,”
Ms Wawn said.

Media contact:
Dee Zegarac
National Director, Media & Public Affairs
0400 493 071
dee.zegarac@masterbuilders.com.au