There’s no escaping the influence of demand and supply, particularly in property.
And the real-life impact of these forces is best demonstrated in the building sector where their imbalance can swing dramatically, bringing tangible fallout for contractors and clients.
This is because labour and materials are the bedrock of our industry and they can be running at feast or famine depending on multiple influences – and there are signs suggesting 2020 could be a tight year.
That said, strategies exist to help reduce the potential pain, but they require owners to prepare early and choose the right team.
So why could this be a tough year and how can you avoid the consequences of low supply in a high demand situation?
A tough 2020
As at the time of writing, the dangerous days of bushfire throughout December and January are still front of mind… and there continues to be a threat in many parts of the country as our long, hot summer rolls on.
Of course, after the devastation comes the clean-up – and there are huge sections of regional Australia where reconstruction work will soon kick off. We’ve rallied around fire-effected communities which means there’ll be an appetite among Aussies to see insurance payouts quickly resolved so these population centres can rebuild.
The result will be that demand for skilled labourers across regional Australia will rise. It could be similar to the mining boom, but on a smaller scale. It becomes tough to get skilled workers in the city when they’re away earning decent dough elsewhere.
Another factor pushing on the demand side of the scale is both Sydney and Melbourne’s property markets. They picked up pace at the end of 2019 and are looking good for positive results in 2020. Renewed confidence will inevitably see owners look to build and renovate in larger numbers as compared to the slower 2017/2018 period.
In addition, rising prices will increase developer’s profit margins, so their thirst for labourers and materials looks certain to rise too.
While workers might celebrate the ability to earn more income and have steady employment, there is one sector of the community set to bear the brunt, and that’s property owners keen to complete a construction project this year. The outcome will be longer build times and higher construction costs.
What’s the solution?
While it’s impossible to dramatically influence the level of demand for labour and materials across the nation, there are some steps you can take as an owner to reduce the risk of your project suffering.
Firstly, work with a builder who has a stable, established trade and subcontractor network. As a company with years of experience in this industry, we’ve built relationships with a range of contractors and suppliers. These are long-term partnerships that exist beyond the single-job timeline.
Our associates are looking to maintain a relationship across the lifetime of their business – and that’s why our clients benefit. We’re able draw on these relationships at times of need, because they know we’ll continue to support them when the pendulum swings back.
Next – make sure your builder has the experience and confidence to offer you alternatives if the materials you want are not available. A good builder will provide a potential ‘plan B’ which can allow you to make a fully informed decision on how to proceed. Their suggested alterative could be the solution that keeps your project moving along.
Third, ensure your builder has a long-term track record of delivery. They should be known for saying what they’ll do and doing what they say. In the building game, reputations are hard won, but easily lost. If your builder can demonstrate through references from past clients that they deliver on what they promise, your decision to proceed with them will be reinforced.
Finally – confirm your builder has a comprehensive client reporting system. The key to successful builder/client relationships is always communication. Your builder should, right from the start, set out what you can expect in terms of costs and timing.
If variations occur during the project due to unforeseen circumstances, a communicative builder will keep you fully informed so that decisions can be made on how to remedy any problems effectively.
If you’re looking to complete a construction project this year, make no mistake – a shortage of materials and labour is on the cards. To avoid the pitfalls, choose a builder with a track record of delivery, a depth of experience, a solid network of industry professionals and blue-chip customer communication skills.
Make them part of your team and you may smooth the inevitable bumps 2020 brings.
