Labour shortage impacts on housing affordability
Rising construction costs, driven by higher labour rates, have lowered the affordability of building a new house in Brisbane.
The third Master Builders Queensland/Cordell Housing Cost Index quarterly survey showed that, for total construction costs of a new home, high labour rates could add over $24,000 to the cost of an average home.
"Labour accounts for almost $66,000 of the $224,500 it now costs to build a new home," the Costing Division Manager of Reed Construction Data, Mr Mike Bartlett, said.
"If labour is charged at the higher end of the rate scale, this cost rises to $90,500, an additional $24,500." "The high level of construction activity in Queensland has seen the vast majority of builders reporting a shortage of skilled labour, which is causing labour rates to rise".
"Increased labour rates in turn are driving construction costs to higher levels, making the average house less affordable to new home buyers".
Despite increases in average weekly wages in the August quarter 2004, the Affordability Index based on the ratio of the total cost of building to average weekly earnings has decreased, making housing less affordable for the average wage earner.
In analysing the breakdown of the cost of building a new house it was found that, of the total cost, materials represented the largest portion, 38%, followed by labour costs, 26%, with professional fees and government charges including the GST accounting for 21%.
Costs were based on a new single-storey four bedroom family home with two bathrooms and double garage, typical of many homes built in South East Queensland.
The survey was conducted by Reed Construction Data in conjunction with the Master Builders Queensland.
For more information contact Mike Bartlett, Costing Division Manager, Reed Construction Data. Phone (02) 9934 5555. Email: info@rcd.com.au.