Builders and new home-owners are breathing a sigh of relief with signs that home building inflationary pressures are easing says Master Builders Acting CEO Shaun Schmitke.
The cost of purchasing a new home decelerated sharply with an increase of just 1.7 per cent during the December 2022 quarter. Earlier in the year, new home purchase costs had grown at their fastest pace on record due to increased costs of labour and materials.
“After a period of high inflation off the back crippling labour shortages and high material costs, we are starting to see some easing in the cost of building a home.
“As state and federal governments continue to roll out incentives to assist housing affordability, we expect this will help reduce out-of-pocket expenses for Australians and further slow the rate of inflation for new dwellings.
“Master Builders urges the Housing Supply and Affordability Council to look closely around continuity and duplication of shared equity, loans and grant schemes in order to maintain a steady pipeline of housing projects and reduce the cost Australians pay for a home,” Mr Schmitke said.
Overall, annual inflation rose to 7.8 per cent during the December quarter, the highest since 1990. However, this was a little lower than anticipated by the RBA. Inflation is now in the process of easing and this is likely to continue over the course of 2023.
“While we are seeing a slowing in demand for new homes, we recognise the Reserve Bank has a difficult challenge to strike the right balance when curbing inflation.
“It is worth pointing out that interest rate increases are adding to the cost pressures in some parts of the economy. Rental inflation is now at its highest in over a decade as landlords are forced to pass higher mortgage repayments onto tenants.
“Non-discretionary costs such as electricity, labour, land supply and material costs are continuing to have a negative impact on the sector.
“The cost of doing business in the building and construction industry needs to be addressed with bottlenecks in our migration system, unnecessary regulatory burdens on builders and a lack of land supply.
“The industry will continue to work closely with the federal and state governments to tackle these challenges head on,” Mr Schmitke said.