Dwelling approvals, stoked by a resurgence in apartments, at a five-year high are driving demand and worsening the disruption to supply chains and labour shortages choking Australia’s house-building industry.
Official figures on Thursday revealed 228,055 new housing approvals in 2021, the most for any calendar year since the 2017 total of 234,673. Separate industry figures showed construction activity dropping over December and January to its lowest level since August.
The difficulty for many businesses comes from not knowing how long the omicron strain of COVID-19 will force workers to isolate because they or a close contact have tested positive to the virus. Worker shortages are adding to already tight pricing of materials and labour, and it is unclear how much the current wave of the pandemic threatens the rising pipeline of work.
“With already constrained supply chains further disrupted by labour availability issues upstream, input prices continued to rise very strongly while both wages and selling prices also rose at a fast pace,” Ai Group policy head Peter Burn said on Thursday.
“Builders and constructors are hoping the reductions in COVID-19 infections evident over the past couple of weeks will ease some of the extra constraints evident over the past couple of months but they, like everyone else, are geared for further uncertainty and volatility.”
The latest Performance of Construction Index, a survey-based monthly barometer of activity produced by Ai Group and the Housing Industry Association, showed cost inflation is soaring.
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