Event: Interview with Clinton Maynard, 2GB
Date: 29 January 2025, 4:10pm AEDT
Speakers: Denita Wawn, CEO Master Builders Australia
Topics: skills shortages, inflation, interest rates, housing crisis, apartment construction
E&OE
Clinton Maynard, host 2GB: Well, is it actually possible? We know we’ve got a shortage of tradies, not enough development, whether it’s two bedroom apartments, three bedroom apartments or one is actually going ahead. Denita Wawn is the CEO of the Master Builders Association, and joins us. Thanks for your time. Do we have enough tradies to actually build all these apartments in Sydney?
Denita Wawn, CEO Master Builders Australia: Simple answer is no, we don’t have enough tradies. We need a lot more skilled people, and that’s part of the debate at the moment, isn’t it? That say we need skilled migration as part of the solution to resolve that shortage. But of course, we’ve got to house them once they get here. So that is the dilemma we’re dealing with, and excuse the background noise and the dilemma we’ve got to resolve at the moment.
Clinton: The Committee for Sydney wants to see more three bedroom apartments. They’ve nominated the Canterbury Bankstown area as a part of Sydney which could supply those areas. Why don’t you think developers have pushed three bedroom apartments in their buildings?
Denita: I think there’s a really big issue here, and that is generally high rise development, and even medium rise development at the moment, is simply not stacking up. We’ve had a situation in which construction costs have increased by 40 per cent over the last five years. General development costs have also escalated significantly. And so what we’re finding is that the cost of development, and then looking at your resale price of what’s in demand, you’re not getting a return. So, we’re seeing massive latent development plans that are just sitting on the books at the moment, until such time as investment rebounds. But the fundamental is that Australia has generally perceived that the best way to raise a family is detached housing. And so there are cultural changes, and your previous speaker was absolutely right. If we’re going to rely on high density living, which we need to do so to meet 1.2 million homes over five years around the country, which is the government’s target, then we need a greater building of higher density homes. But it’s got to be with the right infrastructure around it to support those families who want to make that choice.
Clinton: And that’s what I fear wouldn’t happen. Just while I’ve got you there, Denita, the Reserve Bank is now, most economists are tipping there’ll be an interest rate cut next month after the release of today’s inflation figures, the underlying rate has fallen to 3.2 per cent, the headline rate is 2.4 per cent. So, the likelihood is, if you listen to the big banks, that interest rates will come down next month. Is that likely to help the construction industry to encourage those developers to actually push ahead with apartment buildings?
Denita: Absolutely, the quicker we see inflation down and the quicker we see interest rates down as a consequence, then investment will start to stack up. I’m a little bit more cautious than say some others. Maybe it’s because I’m not an economist, but when I look at the housing figures, there was a slight dip in inflation in terms of housing, but that was because of energy costs going down, in part because of the handouts by government. We’ve still seen an increase in housing costs generally, and a significant bump, yet again, in rental costs. So maybe I’m feeling a little more nervous than some others, that when you look under the macro numbers there are things that are still causing some concern when it comes to housing and resolving the housing crisis we have.
Clinton: I think for most of us, let’s hope the RBA does act in February. Thank you, Denita.
Denita: Pleasure, thank you as always.
Media contact:
Dee Zegarac
National Director, Media & Public Affairs
0400 493 071
dee.zegarac@masterbuilders.com.au