The rise in construction prices has contributed to significant construction material shortages, leading to enormous delays and even the cancellation of home projects by multiple contractors.

But what is set to change in the coming year, if anything? Will the industry see a reprieve, or will construction costs climb unabated?

Rising material costs felt across the market

Unfortunately, the rising cost of just about everything has caused a massive stall over the summer as inflation tightened its grip on the Australian construction industry. The slowdown follows an enormous boom in the construction market before mid-2022. At that time, folks used COVID relief funds to invest in properties – property acquisition exploded, up 56% on the previous year.

No matter what part of the home construction industry, building material prices skyrocketed this year. The steelmaking industry saw a massive 42.1% increase in cost, followed by timber at 20.1%; up over 10% were electrical, plumbing, glass product and aluminum.

Why are building material prices rising?

Building industry material prices across the construction industry have skyrocketed for a few reasons. Whether you’re talking about concrete blocks, gypsum sheets, or even laminate flooring, prices are up. Experts see some consistent reasons why building material prices have risen steadily.

Shortages

There’s been a general shortage of raw materials across the construction industry. A rush on the housing market has primarily caused this, followed by the inability of Australia to produce its materials, which results in the sky-high price of importing materials.

For example, steel has a price increase that has left customers uneasy. The lack of iron ore production in China, upon which Australia depends for its steel-making material, further compounds already rising steel prices.

Other shortages include sand in the country’s southwest. Used as an aggregate for concrete, sand shortages cause supply chain distribution issues in the concrete industry that drive up the cost of houses. As a result, Australian building supply companies must increase their overheads that pass on to the customer.

Volatility of material prices

One of the most significant factors contributing to housing shortages in the market has been the volatility of material costs. In particular, there have been increases in the cost of lining walls, including the cost of sheetrock and gypsum sheets.

As the unpredictable nature of the global economy continues, with inflation biting hard, the cost of materials appears in a near-constant state of ebb and flow, which isn’t good for construction costs in any part of the supply chain – from the source to the end-user.

What are the cheapest building materials right now?

Concrete and concrete products represent the lowest overall increase in building materials in 2022. The average cement block price in Australia is $2.98+GST per unit.

The next-cheapest material is cement – with cement products making up only a 7.1% increase in material costs.

Producer Price Indexes (PPI)

What are Producer Price Indexes?

Producer price indexes are cost comparisons curated by the Australian Bureau of Statistics. The ABS releases this data annually to reflect the change in price from when a product leaves the manufacturer and begins its journey until it reaches the end consumer.

Key statistics 

A few key statistics encapsulate the current state of the Producer Price Index and give some idea of the state of the costs-of-production for multiple producers across the construction industry.

• Input prices have risen by 2.9% in house construction, which means that it costs, on average, almost 3% more to put products into building a home.
  
• Over the last 12 months, input prices have risen by 16% across the construction industry.
  
• Timber prices, board and joinery (wood product) have increased by 2.8%. Timber-framed windows have increased by 6.8%.
  
• Aluminum windows and doors are up by 3.8%. Meanwhile, other metal products have increased by 3.5%
  
• Plaster products have increased by 3.0%.

Building costs crisis and increased prices

Australians now face some of the worst building costs in the country’s history. And price increases are not set to slow down anytime soon. August reporting indicated that soaring building material prices caused house-building prices to increase by almost $80,000.

Shortage of materials

Material shortages contribute to this. For example, wildfires have knocked off native supply of basic building materials. This has caused losses of an estimated $600M worth of native timber, the building blocks of most Australian homes. Timber shortages have led to increasing costs for available product.

Other material shortages, such as previously mentioned steel have been blamed on the war in Ukraine, China’s economic downturn and the lack of iron ore mining. This has left Australian construction companies with no choice but to import steel, which has caused massive price increases to the end-users build cost.

Labour shortages

The new report, 2022 Arcadis Construction, predicts 100,000 unfilled skilled labour roles by 2023, and according to the Housing Industry Association, labour shortages will only grow worse. Other statistics indicate that Australia’s greatest skilled-labour need is construction management. The direst shortages in the industry are civil, electrical, mechanical engineers and surveyors – another critical part of the home building process.

How construction companies cope with price changes

Given that the country faces a considerable housing shortage and those building companies that haven’t been forced to shut down still need to do the work regardless, how are they coping with the exorbitant price changes in the industry?

Shop around

When you’re shopping for something and see a price you don’t like, you shop around until you find the product in a price range that works for you. Construction companies are doing the same.

Before, construction companies would have the luxury of choosing from domestic suppliers of certain materials. Things like PVC ceiling board pricing – made partially from gypsum, was previously created in Australia in the necessary quantities for demand. Unfortunately, like many other building materials, Australian construction companies must shop for the best price for their bottom line.

Minimise wastage

This has led Australian construction companies to seek new ways to use different materials and ensure that they order what they need for a job. Philosophies like “measure twice, cut once” are heavily employed on job sites to reduce material waste and rely on better technology to provide accurate measurements. This includes the use of technology such as digital blueprinting software.

Look for alternate materials 

Supply chain issues have made the use of commonplace materials sometimes impossible, so companies have had to get creative and use alternative materials that are more readily available.

Given the intense environmental impact of currently-popular construction materials, it’s no wonder that industries are looking for alternative ways to deliver to their customers.

Alternate materials can even be used for larger projects – with timber skyscrapers built from the inside out becoming popular in Australian cities, reducing the load on concrete and steel workers and their increasingly-strained supply chains.

Manage building material prices with software

To save vast amounts of time and money, Australian construction companies are also turning to technology to do their inventory of materials. Given that the computer doesn’t lie and doesn’t make mathematic mistakes, inventory management software represents the way of the future for Australian construction.

Buildxact is one such software, a construction management software uniquely designed for residential builders and trades to help them manage projects more easily.

Key features include job management with equipment tracking, profit insights, benchmarking, project scheduling and quote management; and Supplier Connection which allows you to provide faster quotes and win more jobs by facilitating faster collaboration and more accurate pricing.

Improve the accuracy of estimates

A construction company’s estimate can be the difference between its quote being accepted or rejected. Given that the company knows the state of the industry beforehand, it has to vastly improve the accuracy of its estimates to ward off competition. Given the industry’s material shortages, construction companies are going to ensure that their estimates are accurate and they’re not over or under estimating material cost.

Track costings

When cost is as unpredictable as it currently is in the Australian construction business, keeping track of every penny is even more important for businesses. This means utilising technology to track costings and make cost analyses of projects, before Australian construction businesses quote on projects.

“Pick your battles” seems to be the order of the Australian construction business at the moment. Every piece of material is itemised into a construction materials price list in order for companies to better keep track of their expenditures.

How much does it cost to build a new home in 2022?

Building a new home is a big task for construction companies and the prospective homeowners alike, but with the cost of materials on the up-and-up, it will cost somewhere between $1,300 and $3,900 per square metre, depending on the number of rooms and the cost of materials at the time – building material prices have risen more than 16% in the last year.

How to manage delays and shortages

Managing delays and shortages can be a real challenge for construction companies. Customers have paid them to deliver a specific product in a specific timeframe and if they’re late on delivering that end product – it doesn’t look good on their company’s reputation.

Due to rampant insolvency within the industry, builders left a record number of homes unfinished this year. The Australian Bureau of Statistics reported 241,396 unfinished homes in June of 2022.

Managing delays and shortages comes down to be honest with clients and crucially providing alternatives to their preferred building materials, if there is a significant delay in acquisition.

Will building costs go down in 2023?

There’s plenty of market uncertainty ahead in 2023, however, the pace of increased costs should slow down slightly, with decreases of between six, four and three percent in the Gold Coast, Melbourne and Sydney respectively. This flows from what some experts see as easing pressure on global supply chains and increasing stability to a construction industry starved of good news of late.

Learn more how software can help manage rising material building costs

Today, builders like you use modern software to keep up with the latest material prices. Buildxact offers an all-in-one platform for takeoffs, estimating, quoting and job management.

Learn more about Buildxact pricing, or begin working today with a Buildxact representative. Book a demo or start working with Buildxact right away with a 14-day risk-free trial.

The post What to expect from building material prices appeared first on Buildxact AU.

Augmented reality, digital representation, drones and battery-powered backhoes may make for interesting reading about technology trends, but it’s important for home builders like you to focus on the technologies that improve traditional home construction methods with little investment of your time and effort.

That’s why home builders, when evaluating the latest new construction technology, should first look at cloud-based job management software to better face the challenges of today’s home construction industry. 

Today’s challenges demand construction workers save time and money

You already know that rising material prices and labor shortages make the cost of doing business more expensive and complex. Home construction jobs simply take longer to finish when materials and the experienced trades needed to install them are in short supply. 

Working on a drawn-out job that may wind up losing you money is a tough spot all home builders and construction companies try to avoid.

As you realize a job might lose money, odds are as the weeks turn to months, your enthusiasm and ingenuity for the job will drop. This can lead to poor customer service and frustrated clients who can damage your hard-earned reputation. 

What is the role of technology in the construction industry?

The trick to working profitable jobs is to use technology to stay in your wheelhouse. You need to focus on the kind of construction job that matches the strengths of your home construction company. When you stick to your niche, you become better at finding the clients that your home construction team serves best. 

Of course, finding those clients requires proper marketing and networking, but ultimately, you also have to adopt a construction process that allows you to estimate and quote more jobs in less time so that you find the jobs that serve you best.

Accurately quoting more jobs using the right construction technology gives you the confidence to grow your business’ profits.

Also, many home builders use the quoting process to evaluate the nature of the potential customer as well as the job scope.

Discussing material and labor prices with homeowners often reveals red flags about the future client. People who excessively haggle your estimate or expect you to cut corners on quality may not be right for your business. When you are quoting more, you have the power to say “no” when the fit isn’t right for you. 

Builders like you are discovering the path to increasing their capacity to quote lies with modern job management software. Modern software designed for the home construction sector lets you learn a set of basic computer skills that do multiple construction management tasks from one software platform. 

Construction management software offers end-to-end improvement for your construction jobs

Successful builders in today’s market have a clear method for forecasting the cost to build a job. Once those costs are understood, the builder sends out professional quotes that quickly lay out all the tasks, labor and materials needed to finish the job.

Clear customer communication about costs and scope is one of the quickest paths to winning more jobs. Construction technology is then used to manage the job to its final completion and invoicing.

New technology in construction saves upfront admin time

Builders using modern software don’t lose hours behind a desk quoting and closing customers because modern construction technology serves as a one-stop-shop for takeoffs, estimating and quoting. In some cases, the time needed to do a takeoff can be reduced by as much as 80%. The software also offers customizable templates that make writing a quote letter a less time-intensive task. 

Construction technologies can ease planning complex jobs

Once you have the proper customers onboard, running your jobs smoothly helps turn a consistent profit and makes for a satisfied customer. Here again, new construction software can help. 

Today’s best software also offers scheduling and budgeting tools that you set up using your original estimate. This eliminates duplicative work and overly complicated spreadsheets that lead to costly errors.

Imagine scheduling tasks straight from your estimate so that you can see it all on a single chart. The best software allows you to set due dates and assign tasks by email all from the same platform, and this saves you the time and hassle of learning multiple apps or managing confusing spreadsheets.

Construction companies can schedule tasks more efficiently using technology

Once a job is up and running, you can adjust tasks with the click of a mouse and email your team updates quickly and easily. Having the right trades on your job sites at the right time is critical to running a successful job. 

When using modern technology, those successful jobs also pay dividends in the future. You can create templates from your most successful jobs so that you don’t have to start estimates and schedules from scratch with every job.

And because tracking actual costs is straightforward and doesn’t require confusing spreadsheets, you can track your actual costs to your original estimate to identify areas of your build that had unexpected price increases or needs better supply chain control.

With the right software you can create a cycle of continuous improvement that makes you far more efficient than using a traditional method of job management.

Modern technology enables greater supplier collaboration in the home construction industry

As home building become more challenging, builders and suppliers are collaborating more closely to meet the needs of the construction industry. Modern cloud-based tools are giving builders a way to communicate online with their suppliers so that quoting customers is not only easy but highly accurate. 

You know how frustrating unreturned phone calls and emails can be, especially when trying to talk to suppliers about basic things like material pricing and availability.  Waiting on unreturned calls leaves little time for true collaboration among home construction professionals.

How modern technology helps boost collaboration

Modern software makes all of this so much easier because it’s shared online within common workflows that eliminate the need to endlessly email or call your suppliers. Imagine sharing your job details with your supplier straight from the same platform that you used to build your estimate.

Now, imagine that the supplier has shared the material pricing with you in an online file that you can access at any time you need it—even from your construction sites. In some cases, data collected by modern software can offer material prices in real time.

This frees time for you and your supplier to collaborate on other things than pricing. A supplier can suggest different material options that you might not have considered that speed up your job without sacrificing the quality and performance of your build.

If you want to learn more how modern technology can help you work more effectively with your supplier, check out this resource.

Why do we need new technologies in the construction industry?

Many home builders put off learning new technology out of fear it takes too much time. However, with the latest home construction technology, it’s never been easier for construction managers like you to learn how to use construction management software. 

With the same point-and-click mouse and keyboard skills you use to surf the internet and use your favorite phone apps, you can learn how to quickly set up a customized account to perform digital takeoffs, material estimates and job schedules for all your construction jobs. 

To learn more, why not schedule some time with Buildxact? Or visit Buildxact’s website where you can learn how easy it is to get started with a low monthly subscription. Or start today with a free trial or demo.

The post Focus on new technology in construction to improve home building appeared first on Buildxact AU.

The federal government have introduced various financial injections to boost the economy so what can home builders, renovators, suppliers, and homeowners look forward to this coming year? 

Government’s budget outlook  

With housing prices literally going through the roof in 2021, the government has placed a larger focus on helping Australians attain homes moving forward. In the budget announcement, the government pointed out the most important drivers of economic growth over the short term are government spending and residential building. 

These two factors have the largest impact on the economy and can lead to long-term growth. Government spending is imperative because it can stimulate the economy and create jobs. Residential building is important because it provides housing and creates a ripple demand effect for other goods and services. 

Here is a quick look at what you can expect from the Australian federal budget 2022 for the residential building and construction sector. 

Key budget takeaways: 

Residential builders and renovators

• Tap into the tax deduction schemes when you spend on digital technology to help your business – Get a $120 tax deduction for every $100 spent on technologies such as cloud-based software and rebranding your website design. Deductions are capped at $100,000 per year.  
• The same rate of deductions is provided if you spend on upskilling your employees – This goes together as a great incentive to train up your employees, especially in the field of using digital technology.  

• New Australian Apprenticeships Incentive Scheme – Beginning 1 July 2022, support will be given to employers and apprentices for in-demand occupations. Close to a billion dollars of funding has been set aside over the next five years to boost skilled jobs and trades.  
• Women in focus – Support, subsidies, and incentives to encourage women to pick up trades and promoting diversity within the ranks of the industry  

Suppliers

• Increased budget support for timber suppliers – More than $86 million to be pumped into wood plantations over the next five years

• Additional funding of $328 million for the Modern Manufacturing Strategy – Suppliers can look forward to increased funding to develop more advanced and sustainable ways of doing business and maintaining supply of building materials. 
• Same scheme of tax deductions for digital technology uptake and employee training – However, businesses must record an annual turnover of below $50 million to enjoy this scheme. 

Homeowners

• The First Home Guarantee scheme – The government is increasing the number of places to 35,000 from 10,000 per year. Homeowners can look forward to purchasing homes with a deposit of as low as five per cent. 

• New Regional Home Guarantee scheme – This program is encouraging home buyers to move to regional areas and provides support for 10,000 new home construction projects per year.  
• Family Home Guarantee to be increased – Support for single parents to purchase a home with a deposit as little as 2 per cent.  
• Additional $2 billion funding for the National Housing Finance and Investment Corporation (NHFIC) – More support for programs to produce affordable homes for Australians.  

The residential building and construction industry will soon be seeing some much-needed relief in the form of incentives and programs from the government’s budget. These incentives, tax cuts and programs begins on 1 July 2022, all stakeholders in the residential building industry can look forward to improved conditions and a better economic outlook. 

With an emphasis on upskilling the building sector with technology, this is the best time to train up your workforce with digital skills that can save both time and money for your business. Digital software improves operational efficiencies so this is the best time for businesses to participate in the government’s schemes that are designed to benefit the residential building sector. 

We are always looking for ways to help you improve how you operate your business and boosting your bottom-lines with technology. Contact our team today to learn how construction management software can help you take control of your business. 

To read more about the Federal Budget 2022, you can find more details here. 

We know times are tough right now and we want to help. For a limited time, subscribe to any Buildxact monthly or annual plan, and get 2 months FREE as soon as you’ve attended your first training session (save up to $500).

The post Budget 2022 – Key points for the building sector appeared first on Buildxact AU.

Despite lockdowns, the construction industry in Australia is in good shape. Will the end of government assistance lead to a bumpy road ahead?

Lockdowns and challenging news dominated many people’s lives in 2020. But, things are looking up, especially for residential construction in Australia. Buildxact’s Residential Construction Activity Report (H1 2021) data shows a positive trend in the industry based on the first half of 2021. Win rates for builders continue to show signs of stability, despite fluctuating demand.

Overall, the residential construction industry is rebounding from the pandemic. Despite lockdowns, builders showcased their agility and adapted. The government provided much-needed assistance to homeowners via the HomeBuilder Grant and enacted changes to stamp duty policies, which had a trickle-down effect on builders.

There was steady growth throughout Australia, and demand for custom home builders saw continued growth during the first three quarters of 2020. The average number of estimates even increased 6% from Q1 to Q3 2020. As expected, the industry saw a seasonal dip in December, resulting in a 24% decline in the average estimates per builder from November results. This trend recovered in February 2021 and peaked in March; however, average estimates per builder saw a 13% decline in April, in line with the end of the Government Home Builder Grants.

When one takes a closer look, it is clear some states suffered more significant impacts than others.

Victoria was the hardest-hit state in terms of lockdowns. Despite this, there are plenty of signs the residential construction industry continues its road to recovery. Demand for residential builders remains higher than pre-COVID-19 days. The number of estimates per builder for new builds and renovations is also trending higher. But, it’s not all positive news. The ongoing average number of estimates for new builds during the first half of 2021 is lower than its peak during Q2 and Q3 of 2020 — the height of lockdown.

The main story out of New South Wales is that demand for renovations remains below 2020 levels, meaning there are no signs of recovery. In Queensland, the demand for new builds remains strong. Builders are benefiting from increased demand and value for new builds, which has led them to enjoy a 27.3% increase in the average margin for new builds. And in Western Australia, despite reduced demand in the first half of 2021, it saw the most robust growth levels across the entire country. Builders there have increased their margins, and as a result, their profits.

The post Buildxact report finds residential construction is bouncing back from the pandemic appeared first on Buildxact AU.

Residential builders and trades across Australia continue to stay in high demand, according to data from residential construction management software Buildxact.

Buildxact’s Residential Construction Activity Report (October – December 2020) found that nationally the industry finished the year in an extremely strong position with 2020 representing significant overall growth in the average demand for estimates from builders for the second consecutive year.

Even through COVID-19, confidence is high among home buyers and renovators, with low interest rates, personal savings at an all-time high and a range of government incentives like HomeBuilder grant helping to drive this trend.

David Murray, Buildxact CEO commented, “This increased demand by home builders and renovators, has placed significant demand on the supply of materials, impacting the component price. Rather than absorb this cost in the margin of the jobs, the Builders are maintaining their margin levels and passing the increased material costs onto the customer. In Buildxact’s view, this is due to the fact there is such a large volume of working being quoted and delivered”.

After an extremely busy first half of the year, Western Australia continued to record the nation’s strongest growth in demand for estimates, becoming the only key state* to see a significant increase in the average number of estimates per builder through Q4.

In Queensland, 2020 was a strong overall year for new builds, with average number of December estimates per builder increasing 41% on 2019 levels.

While the full impact of Victoria’s prolonged COVID-19 lockdown restrictions is ongoing, demand for new builds remains high across the state. The average volume of estimates per contractor for all job types combined in Q4 was up 5% on Q4 2019.

Murray went on to say, “Residential custom home building and renovations has proved mostly resilient through the pandemic. Strong quote volume in Q4 2020, coupled with an improving economy should see this continue. Snap lockdowns, such as the one in Victoria that closed Construction, will have an impact on consumer confidence if they occur regularly. In addition, increased sales have impacted supply constraints which may also provide some headwinds in housing construction.”

*For the purposes of this report, key states include Victoria, NSW, Western Australia and Queensland

END

For more information

Brittany Mauran

Marketing Communications Manager, Buildxact

Brittanym@buildxact.com

0427 014 959

The post New report finds overall demand for small builders remains high appeared first on Buildxact AU.

Melbourne, Australia — Small residential builders in Australia continued to experience strong demand for new builds and renovations in the September quarter (Q3) of 2020 despite a COVID-19-related slowdown in Victoria, according to data from residential construction management software company Buildxact.

Buildxact’s Residential Construction Activity Report July-September 2020 shows that nationally, demand for new builds and renovations in Q3 2020 (July – September) has exceeded Q2 2020 (April – June).

Buildxact’s subscriber numbers rose by 21% in Q3, but that has been exceeded by growth in the volume of quotes. The volume of quotes in Q3 2020 rose by 31.7%.

Over July-September 2020, Buildxact subscribers quoted on $5.6 billion worth of projects, compared to a total of $3.91 billion in Q2 (April – June) 2020 – an increase of 42.7%.

This growth is not only good for the many builders, but the broader construction industry. Based on an average number of jobs won per small residential builder of 17%, the $5.6 billion of quotes over Q3 is expected to convert to $952 million of new project work. Of this, approximately 40%, or $381 million, flows through to hardware purchases.

“Hardware suppliers may see significant purchases orders in the months towards Christmas,” Buildxact CEO David Murray said.

Geoff Dahlsen, CEO of building supplier Dahlsens said, “For the most part, our builders are faring well during the pandemic, especially those in regional areas. The change to remote working has created a ‘flee change’ where people are fleeing the cities and moving to regional areas. Their money can go further here, so people are buying existing houses and renovating. The HomeBuilder grant has had a positive impact, and now the low interest rate has created more incentive for people to get into the market, so I’m confident we’ll continue to see strong demand for the next six months.”

The average value of quotes over Q3 2020 rose in July and August and hit a peak for the year-to-date in September, at $175,711.

The win rate and average number of jobs won per small residential builder has remained steady, with builders winning around 17% of jobs quoted. Further, profit margins rose in Q3 (three-month average 14.2%) compared to Q2 (three-month average 13.8%), reflecting greater demand.

Mr Murray said, “There’s so much demand out there that some small residential builders are being run off their feet. Our subscriber numbers continued to rise during the September quarter, but it’s still well outpaced by the growth in demand.

“As people have been restricted with domestic and overseas travel and are needing to spend more time at home, many are choosing to put their holiday budget towards renovations and home improvements instead.

“Growth in profit margin suggests that builders have sufficient work and are not under pressure to reduce prices. Profit margin is also helped by the fact that there is more demand for renovations than new builds. Renovations attract a higher margin,” he said.

John Peros, a small builder in NSW said, “We’ve seen a clear increase in demand during the pandemic, and we’ve won higher-value projects. I’m not sure why there has been such growth, but part of it has to come from people working from home. They are spending a lot of time looking at their home and thinking how they can make improvements. And because they’re working from home, it is easier for them to actually meet with us on site.”

After some COVID-19-related volatility early in the calendar year and an improvement in consumer confidence nationally, the average value of builder quotes has returned to and exceeded the historical averages from Buildxact data that we’ve seen of around $170,000. This may partly reflect take-up of the federal government’s $25,000 HomeBuilder grant to build a new home or substantially renovate an existing home.

Whilst growth overall has been healthy at the national level, Victoria had a down-turn in August as COVID-19 restrictions impacted the state. Whilst there was an improvement in September, the recovery wasn’t able to return to the July peak.

Glenn Longstaff, a high-end builder on the Mornington Peninsula said his business has seen a drop off in work.

“A lot of people put projects on hold because there was too much uncertainty. The HomeBuilder program hasn’t helped because the criteria does not cover the type of builds we do. However, while it’s been slow, it’s been a good opportunity for me work on the business and prepare for the future. I’m starting to hear back from people who initially put projects on hold, so I’m optimistic that next year will be busy,” he said.

About the report
Data from the Buildxact report is drawn from thousands of builders across Australia who use Buildxact’s job management and job estimating software.

For further information, please contact:
Cristina Fletcher
WE Communications
cfletcher@we-worldwide.com
Mobile: +61 (0) 481 353 692

The post Work continues to surge for small residential builders amidst COVID-19 pandemic appeared first on Buildxact AU.

Buildxact’s Residential Construction Activity Report April-June 2020 shows that there is strong demand for custom-built home projects and renovations. Although competition in the sector has intensified, many small builders are winning new work, albeit at a slightly reduced average value per project. Margins are healthy.

One of the key observations from the first edition of this quarterly report is that the COVID-19 pandemic had no significant impact on small builders in the residential housing sector over the June quarter, according to the data.

David Murray, CEO of Buildxact said he expected a significant impact on the work being quoted and won by Buildxact’s builder customers when the COVID-19 crisis began. However, that has not happened. One possible reason is that people are spending more time at home and thinking more about undertaking renovations or knockdown rebuilds.
(Download the report here)
“Buildxact’s data indicates there has been a major increase in quoting activity by the small residential builder since the COVID-19 restrictions began in March. The volume of quotes by small builders has increased and margins are steady, which makes for a relatively upbeat outlook for the residential builder,” says Mr Murray.

“Our data shows that demand has not dropped off over the reporting period. Builders are still quoting work. The volume of quotes in June 2020 was up more than 25% (actual: 28%) compared to the volume of quotes in March 2020, and total quote values rose by 29% (June versus March). While our subscriber numbers have grown also during that period, it would not account for that much of an increase, which tells us there is still a lot of demand out there.”

Following the implementation of COVID-19 restrictions in mid-March, the total number of quotes fell in April. However, volumes picked up again in May and June to levels well above what they were in March. When comparing the April-June 2020 quarter to the same period in 2019, the average volume of quotes per builder has increased by 10.7%.

Over April-June 2020, small builders quoted on $4.01 billion worth of projects, compared to a total of $2.19 billion over the same three-month period in 2019—an increase of 83%. While growth in the Buildxact subscriber numbers contributed a little to this increase, the main driver of growth was increased demand.

“Demand is high, particularly for renovation projects. Builders are very busy quoting to secure a pipeline of projects to deliver, and with the average project over $150k, this work will run for many months.” says Mr Murray.

Leigh Wallis, Managing Director of Smith and Sons Renovations, a franchise of 86 small builders across Australia and New Zealand agrees.

“In mid-April, renovations inquiries took off exponentially. Obviously, some people are just tyre-kicking. But people are stuck at home and are looking at their four walls, wondering ‘What can we do to improve the home?’ The other a part of it is that some people may have had a go at renovations themselves and now need a tradie to fix up their mistakes. The other thing is that since COVID-19, people have got money that they may have intended to use on travel, but that’s now off the cards. They’re quite happy to spend that money on renovations,” he said.

“I think we have fared quite well during COVID-19 compared to other sectors. For the next three months, if inquiries keep going the way they are and we don’t get another resurgence of COVID-19, I think we should get through it,” Mr Wallis continued.

Assessing the impact of HomeBuilder

The federal government’s $25,000 HomeBuilder grant announced in early June has helped boost the number of quotes, with quotes up 11% between June and July.

The strong demand for renovations and custom-built homes continued over July 2020, with the total value of all work quoted growing to $1.62 billion. In February 2020, the value of all work quoted was $1.1 billion.

“So, over the course of COVID-19, we’ve gone from $1.1 billion to $1.62 billion—massive growth,” says Mr Murray. “We’ve not had that level of growth in the period previously.”

However, the grant is yet to have an impact on jobs won.

“Builders are telling me that they were very busy beforehand, and now they are quoting on projects with the government grant, but they haven’t necessarily started those projects yet,” says Mr Murray.

The second COVID-19 lockdown in Victoria is expected to have a minimal impact on small builders because the size and nature of the projects on which they work requires fewer than five people on site.

About the Report

Data from the Buildxact report is drawn from thousands of builders across Australia who use Buildxact’s job management and job estimating software.

Access the report here

The post Buildxact publishes first Construction Activity Report appeared first on Buildxact AU.