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06-10-2014, 10:21 PM
Tradies' wages cost up as construction rises
Michael Bleby
842 words
7 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
In Western Australia a bricklayer now costs more – up about 16 per cent more – than at the start of the year.
A shortage of brickies that has grown through the winter months is likely to spread to other trades, but how much isn't clear yet, says Dale Alcock, the managing director of ABN Group, the country's third-largest home builder.
"It's almost a day by day, week by week project to see where the pressure comes from and whether it will flow through to carpenters, to other trades," Mr Alcock said.
"We think it will, but we're only guessing what the breakout in costs will be."
Still, Mr Alcock, whose Perth-based company made 4142 housing starts last year, the third-largest number after apartment builder Meriton and Perth rival BGC, isn't too worried.
The WA housing market is booming, but is doing so on the back of a slowing resources-based construction economy in the state's north that would have otherwise made the pricing competition sharper.
"We're fortunate that we didn't have this situation three or four years ago," he said. "It would have been a really huge problem."Skilled bricklayers cost more
In Perth, where the majority of dwellings are detached homes and made of double brick walls rather than the brick veneer that is common elsewhere, bricklayer price inflation is roughly double the national average of about 8 per cent, according to the Housing Industry Association.
Construction-industry wage growth remains benign – 2.8 per cent overall as of June – in an environment in which contractors have concentrated on winning work and replenishing depleted order books. And even though some markets are returning to life, construction industry wage inflation is a long way from getting economists worried.
"There was a lot of slack in the market that is still yet to be fully absorbed," HIA chief economist Harley Dale said.
That slack is being absorbed, however. A Master Builders Australia index tracking the difficulty builders report in finding skilled trades – particularly brickies, carpenters and site managers – has picked up for the first time since conditions slowed in 2010. "Residential construction was languishing for three years," MBA chief economist Peter Jones said. "The extended slowdown masked underlying skill shortages and these will inevitably resurface in some markets."
In NSW, the housing boom is combining with a commercial construction pick-up to bring competition back into the pricing. Over the past six months roles such as foremen, project managers, construction managers and contract admin staff have come into short supply, said Adam Shapley, the regional director for NSW of recruiter Hays.Counter offers flow
"What we've seen is increase in the amounts of candidates being counter-offered significantly higher than what they were on, whereas a year ago, that wasn't the case," Mr Shapley said.
Peter Campbell, the chief executive of Clarendon Residential Group, the state's sixth-largest home builder, says costs – including bricklayers – are rising, but under control.
"The demand is there, the cost pressures are there, but so far they've appeared to be manageable," Mr Campbell said.
In part, it is due to the far greater proportion of foreign workers active in the market than was the case during the state's last housing boom between 2001-03, he said.
"These people are doing a job Australians don't want, or there are not enough Australians to do them," he said.
While Hays' latest quarterly report says the growing infrastructure spend in NSW is creating a level of demand in the consulting and construction markets not seen since 2010, Mr Campbell isn't worried about costs getting out of hand in the residential market.No shortages
"I don't have my people coming back to me and reporting looming shortages of any of our materials or labour," he said.
The national construction economy is patchy. Master Builders Victoria director Radley de Silva said some larger contractors are moving Victoria-based staff to busier markets in NSW and Queensland.
The Victorian market itself is likely to pick up, but not even this will necessarily lead to wage inflation, says director Kane Devitt of contractor L. U. Simon which specialises in commercial and multi-residential projects. "I'm probably the most optimistic I've been for while," Mr Devitt said. "In anything from the $20 million to $50 million and $50 million to . . . $100 million range, there seems to be a lot more out there."
The onset of work is likely to be slowed, however, by the November state election and natural break that comes with the end of the year.
Even then, however, the construction timelines of the commercial and multi-res projects that he deals in are unlikely to push prices of the so-called finishing trades – plasterers to tile-layers, carpet-layers and joinery workers – up any time soon, he said.
"It's not going to have a snowball effect all the way though," he said.
Fairfax Media Management Pty Limited
Document AFNR000020141006eaa70003o
Michael Bleby
842 words
7 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
In Western Australia a bricklayer now costs more – up about 16 per cent more – than at the start of the year.
A shortage of brickies that has grown through the winter months is likely to spread to other trades, but how much isn't clear yet, says Dale Alcock, the managing director of ABN Group, the country's third-largest home builder.
"It's almost a day by day, week by week project to see where the pressure comes from and whether it will flow through to carpenters, to other trades," Mr Alcock said.
"We think it will, but we're only guessing what the breakout in costs will be."
Still, Mr Alcock, whose Perth-based company made 4142 housing starts last year, the third-largest number after apartment builder Meriton and Perth rival BGC, isn't too worried.
The WA housing market is booming, but is doing so on the back of a slowing resources-based construction economy in the state's north that would have otherwise made the pricing competition sharper.
"We're fortunate that we didn't have this situation three or four years ago," he said. "It would have been a really huge problem."Skilled bricklayers cost more
In Perth, where the majority of dwellings are detached homes and made of double brick walls rather than the brick veneer that is common elsewhere, bricklayer price inflation is roughly double the national average of about 8 per cent, according to the Housing Industry Association.
Construction-industry wage growth remains benign – 2.8 per cent overall as of June – in an environment in which contractors have concentrated on winning work and replenishing depleted order books. And even though some markets are returning to life, construction industry wage inflation is a long way from getting economists worried.
"There was a lot of slack in the market that is still yet to be fully absorbed," HIA chief economist Harley Dale said.
That slack is being absorbed, however. A Master Builders Australia index tracking the difficulty builders report in finding skilled trades – particularly brickies, carpenters and site managers – has picked up for the first time since conditions slowed in 2010. "Residential construction was languishing for three years," MBA chief economist Peter Jones said. "The extended slowdown masked underlying skill shortages and these will inevitably resurface in some markets."
In NSW, the housing boom is combining with a commercial construction pick-up to bring competition back into the pricing. Over the past six months roles such as foremen, project managers, construction managers and contract admin staff have come into short supply, said Adam Shapley, the regional director for NSW of recruiter Hays.Counter offers flow
"What we've seen is increase in the amounts of candidates being counter-offered significantly higher than what they were on, whereas a year ago, that wasn't the case," Mr Shapley said.
Peter Campbell, the chief executive of Clarendon Residential Group, the state's sixth-largest home builder, says costs – including bricklayers – are rising, but under control.
"The demand is there, the cost pressures are there, but so far they've appeared to be manageable," Mr Campbell said.
In part, it is due to the far greater proportion of foreign workers active in the market than was the case during the state's last housing boom between 2001-03, he said.
"These people are doing a job Australians don't want, or there are not enough Australians to do them," he said.
While Hays' latest quarterly report says the growing infrastructure spend in NSW is creating a level of demand in the consulting and construction markets not seen since 2010, Mr Campbell isn't worried about costs getting out of hand in the residential market.No shortages
"I don't have my people coming back to me and reporting looming shortages of any of our materials or labour," he said.
The national construction economy is patchy. Master Builders Victoria director Radley de Silva said some larger contractors are moving Victoria-based staff to busier markets in NSW and Queensland.
The Victorian market itself is likely to pick up, but not even this will necessarily lead to wage inflation, says director Kane Devitt of contractor L. U. Simon which specialises in commercial and multi-residential projects. "I'm probably the most optimistic I've been for while," Mr Devitt said. "In anything from the $20 million to $50 million and $50 million to . . . $100 million range, there seems to be a lot more out there."
The onset of work is likely to be slowed, however, by the November state election and natural break that comes with the end of the year.
Even then, however, the construction timelines of the commercial and multi-res projects that he deals in are unlikely to push prices of the so-called finishing trades – plasterers to tile-layers, carpet-layers and joinery workers – up any time soon, he said.
"It's not going to have a snowball effect all the way though," he said.
Fairfax Media Management Pty Limited
Document AFNR000020141006eaa70003o