Ep13 - Market Update

Market Update - with todays episode we thought we would do something different and provide what we see happening in the new year with the construction market and the outlook for 2023

Transcript

[00:00:00] Speaker 1: Hi everyone. Welcome back to Building a Bluebird. Today is episode 13. We're in, uh, January, 2023. So we thought what a great way to start the year by doing a market update and what we see is gonna be happening for the next 12 to 18 months and give you sort of an update and what we sort of catch are happening.

So let's get straight into it. Welcome to Building with Bluebird, the Design and Renovation podcast, brought to you by Christian Case and Jeremy Thomason, directors of Bluebird Design and Build. Highlighting the dos and don'ts of renovating or building your dream home. This podcast will give you the insider's guide to the home building journey.

As well as interviewing other industry specialists, Christian and Jeremy, bring their knowledge and expertise to the table for you, for people. Now let's get into this episode, and if you enjoy, please like, share, and subscribe.

[00:00:59] Speaker 2: Hey Christian, welcome back. Welcome back, Jeremy . Excited 

[00:01:02] Speaker 1: to be here. I'm excited for the start of the year. So how was your Christmas? Yeah, pretty good. Just spent it with the family. Kids are still on school holidays with the amount of school holidays I have. But anyway, that's, uh, I'm glad to be back at work , that's for sure.

How about yourself? It 

[00:01:16] Speaker 2: was good. Didn't do much bit of work around the house. Went away on a hike and then that was about it. It was over. Could have done with another week or two, but. I think you go a bit crazier. After a while you've got enough, but I am excited for this year and ready to really hit the ground running.

I think it's gonna be a, a really good year, actually, after the turmoil of last year. 

[00:01:36] Speaker 1: Yeah. I think the last 12 to 18 months have been pretty rough on the industry and all industries, to be honest. It's not just building like building's taken a massive hit, but every industry or anyone I've ever spoken to, It's been a bit of an a 

[00:01:48] Speaker 2: rollercoaster.

Yeah, I know it. It did feel like last year a lot of our other mates that are builders that we'd been speaking to had all sort of had enough and were ready to almost wrap it up and take a, yeah, a 12, which is 12 month or two year holiday. And I definitely felt that speaking to a lot of our subbies too, like everyone was just really stressed.

There was a lot going on. Everyone's on edge. Yeah. As well. Materials were hard to. People were just turning on 

[00:02:16] Speaker 1: each other. Yeah. And also with the weather that we had in the beginning of the year, I think that threw a spanner in the works Yeah. To start with for sure. Which is not great because that can set everyone's projects back weeks.

Yeah. So that was sort of the, a great lead in to, yeah. 

[00:02:31] Speaker 2: It was like it was off to a bad start from January. It was all that rain and pushing things back and then, Shortages 

[00:02:37] Speaker 1: and, and then all the media. Yeah. Hype and then interest rates. Yeah. So hopefully this year is uh, new Year. New me. New year. New 

[00:02:46] Speaker 2: us 

[00:02:46] Speaker 1: for sure.

So basically this episode, we really wanted to. Give, what we envision is gonna be happening the next 12 to 18 months. Obviously we don't have a crystal ball, so this, um, advice is based on speculation only and what we are seeing in the industry, I guess. Yeah, that's 

[00:03:04] Speaker 2: right. Our, our observations and thoughts on around what's happening and what has happened.

[00:03:09] Speaker 1: So obviously the weather we can't control, but that had a massive contributing factor last year. They're predicting that we're gonna have another rain event early. January this year, this month actually, or early next month, but hope our office doesn't flood again. Yeah, let's hope because we've only just got everything back in.

But yeah, that's another contributing factor. Hopefully it's not as bad. Obviously we can't predict that one, but it's more the rest of the, I guess, lead times of materials and labor that are gonna be the controlling factor this year. 

[00:03:39] Speaker 2: Yeah, that's right. I generally, we've seen lead times on, on most building materials come right down.

Yes. Um, that's stuff that we're experiencing sort of halfway through last year, or early to halfway through last year. Seems to have stabilized currently. 

[00:03:55] Speaker 1: Well, people are getting used to it. Yeah. So there is that. No, that normal lead time now is four weeks. Yeah. And 

[00:04:01] Speaker 2: people are more organized, but it has, it has come back like we're not, you know, we're not having to wait three months for trusses and floor systems and things like that.

So all it feels like all those normal building materials have, have really come right back in terms of availability. 

[00:04:16] Speaker 1: Appliances are still an issue. And yeah, this is the beginning of the year, 2023, but hopefully towards the end of the year or the middle of the year, appliances sort of become readily available.

Yeah, some 

[00:04:26] Speaker 2: of those other finishing items as well, like some tile. Tiles. We've had some dramas with even up to late last year, just, and a lot, actually, a lot of it's been actually transport. Like, yes, you know, people might have stuff in their factory ready for you, like appliances or you know, pallets of tiles, but they can't get the transport companies to get them to site, or they're taking weeks longer than they should.

There 

[00:04:49] Speaker 1: are still some roads that are underwater down south, so 

[00:04:52] Speaker 2: it's crazy. That's been a big one, but I think generally it's all sort. It's all leveling out in terms of availability. 

[00:04:58] Speaker 1: So it's gone from being 12 week lead times on timber to, what do you reckon now? Three, four weeks. Oh. Like 

[00:05:05] Speaker 2: we, I put in an, a last minute order in for a, a big l v l roof beam yesterday, and Brett's told me we'd have it in two days, so there you go.

So that's not a big floor system, it's just one item. But I, I can remember when. Early middle of last year when that would be a two week turnaround, maybe even a three week. Yeah. So it's, it's nice 

[00:05:26] Speaker 1: that's come right back. And even if they were around. Yeah. So sourcing those alone was another issue. Yeah, that's right.

So then we've got subbies in terms of. Availability. Yeah, 

[00:05:37] Speaker 2: I think all of the subbies that are front loaded in jobs or do a lot of work at the starter jobs seem to be fine in terms of availability or in my experience anyway at the moment. Like, you know, plumbers and Sparkies and even like plasters and stuff like that are pretty good now.

I'm not having any trouble with them. Yeah, obviously concrete's still an issue. Concrete is an absolute nightmare still, and we'll talk about prices in a sec, but I know concrete will be going up in price. Probably a bit this year. 

[00:06:06] Speaker 1: Yeah. But the thing is booking concrete at the moment. 

[00:06:08] Speaker 2: Book. Yeah. Booking is an absolute nightmare.

Like you've gotta be book, if you wanna first up pour, if you can even get it, you need to be booking it. Like, so first up, pour 

[00:06:16] Speaker 1: you meaning first up pour of the day. Yeah. 

[00:06:18] Speaker 2: 6, 6, 6 30. In the morning. In the morning. That's when that, you know, that's when you wanna be pouring concrete 

[00:06:24] Speaker 1: and at you. What do mean you don't like pouring concrete at 

[00:06:26] Speaker 2: midday?

Oh, I don't really care. But our concrete is hated . But yeah, it feels. If you can even get a spot at six 30 at the moment as a smaller operator like us, that you need to be booking that like 4, 5, 6, even seven or eight 

[00:06:39] Speaker 1: weeks out. And if the thing is, if it rains that day, you miss your spot. Yeah. Then you've gotta 

go 

[00:06:43] Speaker 2: back in the line.

Yeah. Cuz all, all the, just particularly with concrete, all the, there's those couple of new massive developments. Like there's Queens Wharf, there's go between Yeah. And there's the New Cross River Rail. Cross River Rail. And that's just taking so much concrete from everyone else. It's making it, IM. 

[00:07:00] Speaker 1: Yeah. So that's another item I guess that needs to be thought about.

[00:07:04] Speaker 2: Yeah, I mean, that's specific once you've got a slab down though, that's specific to Brisbane. So, you know, I don't, I don't know what's happening outside of Brisbane with lead times on concrete, but that, that's definitely a, a problem in Brisbane at the moment. 

[00:07:15] Speaker 1: Yeah. So I guess once you've got a slab down, it's, it's play on.

But getting to that slab stage has. Yeah. Yeah. 

[00:07:23] Speaker 2: An issue. Yeah. And then you throw in that difficulty with some rain. Yeah. And as you said, if you have to cancel, you know, you've, it's a real spanner in the works. It could set you back four, six weeks. 

[00:07:35] Speaker 1: Yeah. Right. So in terms of other subcontractors, everybody else is sort of coming back into 

[00:07:41] Speaker 2: Yeah.

I mean, Tyler's still seemed to be really busy. 

[00:07:44] Speaker 1: Yeah. I know there was a, a boom in pools. Yeah. Last year and guys. Doubling what they normally do in a year of pools and Yeah, based on some of the forums, online pools have got lead times of 12 months. Yeah. Which is just hectic, crazy. So, and they're sort of charging whatever they want at the moment.

[00:08:04] Speaker 2: All the other subies in my. Opinion have sort of settled down a bit, but it's just a few of those finishing trades that I've been struggling with. 

[00:08:11] Speaker 1: Yeah. And some of the guys that we've like, that we've got on board are really good. Yeah. And communication's really, really great in terms of 

[00:08:18] Speaker 2: updates. Yeah. And they look after us when we're trying to get things done.

Um, yeah. 

[00:08:22] Speaker 1: And everyone's sort of struggling, so everybody's in the same boat of trying to basically keep their head above the water and keep up with the work. Yeah. So it's nobody's fault. It's just, it's the times at the moment, but we're starting to see. It's starting to let up a little bit. So I think in about six months that'll be about the sweet spot to sort of have some great stabilization and some confidence again.

[00:08:46] Speaker 2: Yeah. And I look, I don't think that, I don't think the market's gonna fall for Cliff. Like no, it's, there's, there's still so much work around, there's a shortage of builders. QBCC has been ripping. Trade and building licenses. Yeah, there was some release at some crazy rate. So there's less builders, there's less trades, there's more work.

Yeah. I think it's gonna fall off a cliff. So if you're planning something or you want to do a project or a Reno, I'd be starting to think about it. 

[00:09:14] Speaker 1: I'd start getting designs together now. Yeah, if you're gonna do it because yeah, like I think six to eight months, I reckon it's a sweet spot to start construction project.

But yeah, just coming 

[00:09:25] Speaker 2: back to. I guess pricing of what we're gonna see coming up throughout this year. We're hoping that the, those crazy increases in prices are behind us. Like of course there is always gonna be increases in Yeah. We 

[00:09:41] Speaker 1: normally have two to 4% on most items. Yes. Every 

[00:09:43] Speaker 2: year. Yes. And yeah, that's pretty normal.

Like costs of things go. To produce, like transport, labor, labor, all that sort of the fuel. There's a fuel levy at the moment. Yeah. Fuel levies, like all that sort of stuff goes up and naturally. Products and materials and labor go up every year, but what we saw over the last particularly 12 to 18 months was just, Arts, which is crazy.

Like probably never had, never been seen in our lifetime. Anyway. Yeah, hopefully never again. Hopefully never again, never say never. So hopefully those crazy spikes are behind us and we're just looking at a more sort of gentle curve of price increases. Yeah. 

[00:10:20] Speaker 1: So in terms of pricing and blowouts, I don't.

Anything really having a 

[00:10:26] Speaker 2: major. Yeah. Look, I know there's some concrete price rises coming in sort of late this month or start of next month. Concrete is one that's also gone crazy over the last 12 months. Like it's gone up like. 50, 70 bucks a a meter. But yeah. Ho 

[00:10:39] Speaker 1: So that's about 40 to 60% from an original base price?

[00:10:43] Speaker 2: Yeah, probably. Yeah. Something like 

[00:10:45] Speaker 1: that. Yeah. So that's a pretty massive increase. And that's just because of demand? That's demand, yeah. Yep. So hopefully we start seeing, and there's, we see that demand come down, but we've seen some pretty big projects happening even up in Toowoomba. Yeah, there's um, I think there was a big rail station getting poured and that literally.

Pulled every concrete truck out. A Brisbane tub there . So yeah, good. I dunno how they went going up the range, but uh, yeah, that'd be pretty interesting. Swap the hubs, put it in low just, but in terms of pricing, I feel there's more confidence there now. I think guys can start locking prices back in. and gives the consumer a bit more confidence 

[00:11:24] Speaker 2: as well.

Yeah, I think that's the big one. Like I know there was so much negative media last year around every builder was going broke and the industry was, 

[00:11:34] Speaker 1: and builders charging through the roof. And I don't like, I don't believe many builders made a HEPA coin and over that last 12 or 18 months, I think maybe it'd be more supplies than anybody else because they've passed.

Every increase, which I guess they have. Well they do cuz they're a business, so it's nothing against them. But the builders have all had fixed price contracts. Yeah. So all these poor operators, and normally they're all small family businesses have taken the hiding and. I think the media's loving bashing builders at the moment where, yeah.

Well, 

[00:12:09] Speaker 2: hope that seems to have, I don't know, in my feed. No, there was one yesterday in the paper. That's, I, I've stopped seeing it. All I see is Harry and Megan Rubbish. Yeah. So hopefully that's the end of media beating up builders because it does nothing for consumer sentiment and confidence in the market.

But I, I feel like people are, it feels a little bit behind us now and I think people are starting to feel a bit more confident. If they sign up, build contract, their builder will finish the job. Cuz all these crazy increases are sort of slowed right 

[00:12:40] Speaker 1: down. Yeah. And a lot, a lot of those larger businesses were the ones being affected because they've got thousands of homes locked in at a Yeah.

A set rate. And then they've had those increases over those small amount of times and like, whereas the smaller guys maybe only have five, six projects a year. Whereas these other guys, yeah, they'll have hundreds. Yeah. So that gives a bit more confidence to people. And we stop seeing people going bankrupt in the media cuz it's pretty horrible to hear about.

[00:13:07] Speaker 2: Yeah. Like you don't wish that upon anyone. It's, you know, most of these, especially the smaller businesses, are all sort of family operations and it's awful to see mm-hmm. the stress that a lot of people are going for and also the stress that, you know, if you are, if you're in the middle of a build. Yeah.

If you're a consumer and you are. Middle of a build that's, that's going bad because the builder's having financial issues. That's like, it's awful for everyone involved. Like the builder, the SAS 

[00:13:32] Speaker 1: customer. Yes. Especially like if you, if you are building and you're seeing, oh, there's nothing happening on site, or it looks a bit slow.

Yeah. You start freaking out. Yeah. And you're hearing all this stuff in the media. It's just compounding. Yeah. The issues. So I think having these issues slowing down and I think the main. Bashing at the moment. Yes, Megan and Harry or, um, the RBA at the moment. So yeah, we'll see what's gonna happen in the next six months because there's gonna be a lot of home loans coming off, fixed loans and going back to variable or those fixed loan terms have completed.

So it's gonna be interesting what's gonna happen there. Yeah, 

everyone 

[00:14:06] Speaker 2: just have to buy a few less flat, flat wise per week. 

[00:14:10] Speaker 1: No more abbo on toast. Yeah, no . So, In terms of availability, like that's materials we're seeing that's stabilized in terms of pricing and availability. So then subbies come next, I guess, where there's stabilization and more subcontractors, and I think their pricing's also a little bit more stable.

We didn't really get smashed by anybody or haven't really heard of sub's passing on ridiculous price rise. Because, um, a lot of them are in the same boat of 

[00:14:39] Speaker 2: Yeah, they, they've all been sort of contracted. Their, their costs have gone up as well and they've, you know, they've gone in on fixed price quotes, so it hasn't been easy on them either.

No, that's 

[00:14:49] Speaker 1: for sure. So I think, um, yeah, the last 12 months have been hard on everybody, so looking forward to a good 12 to 18 months ahead. It sort of stabilizes sunshine and blue skies. Yeah. So in terms of building and designing for the next 12 to 18 months, I'd be starting now, I guess, and having at least a planning stage or having a chat to someone at least.

Yeah, definitely. 

[00:15:16] Speaker 2: If. As you said, if you wanna get something started within the next 12 months, you definitely need to be starting the planning process now. Yeah. 

[00:15:23] Speaker 1: The lead time's still there to lock a builder in. Yeah. From what I've heard, I don't know too many guys that are available start tomorrow. Yeah.

So there is still that. That lead time and building approvals at the moment are just horrendous in terms of putting it in and getting approvals from council. Yeah. 

[00:15:40] Speaker 2: They're ta they're taking so long, like 

[00:15:42] Speaker 1: six to 12 weeks. Yeah. Like depending on what's involved. Yeah. That's not even a da. It used to be 10 days, just used to be so quick and I guess.

It's because of all the regulations that have changed, there's a lot more paperwork now. I think it's like double compared to what we had. Yeah. 12 months ago. I know QBCC is cracking down in Queensland on certifiers. They're the new flavor of the month and um, yeah, so certifiers are just making sure everything is detailed or that we're signing off on every little thing that normally we would not be signing off on.

So it's. Yeah, it's quite a, a trying time, but in saying that, as long as you're prepared and organized from the get going, follow the correct process, it should be pretty simple to get it through. So not allowing two months for your design and council approvals, just Yeah, no, 

[00:16:33] Speaker 2: that's, that's nowhere near enough.

[00:16:34] Speaker 1: No, it's a minimum six months now. So you've gotta really, for a custom home, you've really gotta get on the ball early and be thinking six to 12 months. Yeah, so if you are wanting to build next year, you need to be starting in a couple months in terms of your process of design and yeah, getting all your surveys and getting all the right team together so we can help with that.

We can , so it's cool. . But yeah, it's, you've just gotta be on the front foot and not just leaving it's the last minute and then stressing about it because it's not a nice process then. Yeah, that's right. So the industry's starting to let up and we're seeing some more positivity around, so it's just about being organized and getting on top of it and getting the right people in place.

[00:17:18] Speaker 2: Cool. All right, well that's about it for today's episode. 

[00:17:22] Speaker 1: Yeah. So hopefully, uh, we've given you a bit of a insight on what we think's gonna be happening over the next 12 months and we're pretty excited. I'm actually a bit more spurred on this year. Yeah, I'm ready to go. The end of last year was quite, it was a, a hard push, but we got there.

New Year knew us. Yeah. Let's get into it. Let's do it. And if you've got any topics you want us. To cover, just shoot us an email@infobluebirddc.com au and hopefully we'll give you some great information. This. Perfect. Great. See you next time, C. All right, folks. Thanks for listening to Building a Bluebird.

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