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Reduce building costs to tackle inflation: MBA

According to Master Builders Australia, monthly inflation highlights the need to bring down building costs and increase housing supply.

According to Master Builders Australia, monthly inflation highlights the need to bring down building costs and increase housing supply.

Rising housing costs were one of the biggest drivers of monthly inflation, rising from 3.6 per cent to 4 per cent, the worst result since November.

Rent prices are 7.5 per cent higher than a year ago while the cost of new dwelling purchases is up 4.9 per cent.

“Builders are pulling their hair out over their concerns continuously falling on deaf ears. Inflation is a capacity killer, making investment more expensive and less attractive,” Master Builders Australia CEO Denita Wawn said.

The ABS also released the March quarter engineering construction data today showing its first decline in two years.

Master Builders Australia Housing
rafters and beams in the construction of the roof frame

The volume of engineering construction dropped by 2.3 per cent during the March 2024 quarter.

The reduction affected both public sector and private sector projects.

“On the ground, we continue to hear projects for new homes, commercial or infrastructure construction simply don’t stack up because it takes too long to build and is too costly,” Wawn said.

“If we don’t get inflation under control and urgently start boosting housing supply we are in for a lengthy period of pain and depressed construction activity.”

“We know governments have acknowledged that more reform is needed to reduce building costs but the rubber needs to hit the road.”

Chipping away

There was a 2.4 per cent fall in engineering construction work done for the public sector while the volume of private sector activity fell back by 2.2 per cent.

Construction safety
Worker is helping crane that carrying wheelbarrow full of fresh mortar to keep balance and direction for transport. Unfinished building with scaffold is in the background.

The reverse in engineering construction activity is ominous given that it was previously the main source of growth in the industry.

“Bringing down housing and rental inflation can only be achieved once we get a move on and speed up planning reforms, address tradie shortages through domestic and skills migration pathways, reform the regulatory environment, and scrap damaging elements of recent IR changes,” Wawn said.

“Looking ahead, Australia’s economic challenges will only be compounded by new pattern EBAs rolling out across the industry which will increase costs and drag productivity backwards.”

All three pillars of construction activity are now moving backwards.

“Unfortunately, the industry, which is at the coalface of overcoming the housing crisis and delivering the essential infrastructure that communities are crying out for, has been left powerless by an increasingly aggressive construction union,” Wawn said.

“Enough is enough. It’s time to bring back an industry-specific regulator with real teeth and restore confidence in the building and construction industry.”

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