The housing crisis in Australia may not be solely due to lack of space or skyrocketing land values, but rather a growing shortage of skilled tradespeople and the high costs associated with construction, according to real estate expert Tom Panos.
The Block auctioneer has been vocal on social media about what he claims is the root cause of Australia’s housing shortage. Panos asserts that the nation’s housing problem isn’t necessarily a demand issue, but a construction problem, with construction costs skyrocketing by 40-50% in recent years.
In a series of Instagram videos, Panos stated: “It’s not a housing problem we’ve got, it’s a construction problem,” highlighting the soaring costs and the 40% delay in building approvals. Developers, he says, are reluctant to proceed with projects due to the financial risks involved and the inability to secure enough tradespeople.
“The truth is, there is no developer that’s going to pull their finger out and sign a contract,” Panos added, blaming high land values and resale values that no longer “stack up.”
One of the key issues, according to Panos, is the escalating daily rates for tradespeople. He mentioned that bricklayers are now expecting around $900 a day, which makes it more expensive for developers to hire skilled labor, further slowing down construction.
Panos also pointed to new legislation in New South Wales, which now allows duplexes to be built on smaller blocks with reduced frontage requirements, a step toward easing development. However, he notes that the real bottleneck remains finding people to carry out the work.
“We need some incentive for developers,” Panos argued, drawing attention to the fact that construction in Australia is often three to five times more expensive than in other countries. He used ChatGPT to compare construction prices globally, showing that Australia’s costs per square meter range from $14,000 to $18,794 (US$9,000 to US$12,000), while in the UK, USA, and Canada, they range from $5,480 to $6,100. European countries fare even better in terms of construction costs.
Despite the lower costs abroad, Panos contends that the higher wages and risks involved in the Australian construction industry are a significant deterrent for developers.
Without developers, there is no product, and without a finished product, there are no homes for Australians, Panos concluded.
His social media posts sparked mixed reactions, with some agreeing with his assessment while others criticized his reliance on ChatGPT data. Some users pointed out that the problem may lie in the economic pressures faced by tradespeople and the soaring material costs, rather than developers alone.
Nevertheless, Panos stands firm on his message: creating more space or land will not solve the housing crisis if there is no one available to build the homes.
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