COVID’s impact on the Hunter Region’s building industry

COVID’s impact on the Hunter Region’s building industry

The shutdown of Sydney’s construction industry due to COVID restrictions has made headlines over the past couple of months and the Hunter Region’s building industry is feeling the impact too. 

With trades unable to move out of the Greater Sydney area, and heavy COVID restrictions enforced on building sites, the region is experiencing delays that can add a month or more onto the timeline of building projects, impacting the overall cost of a new build.   

COVID restrictions are creating shortages with building supplies, such as timber and steel. With a lot of suppliers based in Western Sydney, the ongoing lockdown is slowing down the delivery of materials like gyprock, and border shutdowns with Queensland have impacted kitchens and vanities coming through for my clients. 

Despite these challenges, land sales in the Hunter Region have spiked significantly over the past 12 months, with strong demand causing prices to rise by more than $100,000 in some areas. Kick-started by the home-builders grant and escalated by the influx of city residents relocating to the Hunter Region, we’re seeing more construction activity than ever and a fear of missing out is driving panic buying. 

As a result, purchasing land in the current environment is competitive, with land often selling within 24 hours of being released. Where a house and land package was available for under $450,000, you are now paying around $700,000. 

We’ve also seen a shift in buyers’ perception of location. Areas where developers were offering extra incentives to sell land a few years back are now seeing buyers camping out overnight ahead of land releases. Blocks that used to cause hesitation among buyers – like backing onto a railway line, or a corner or sloping block – are now being snapped up. 

Everything is selling straight off the database, so if you are looking to purchase land, make sure you get on databases ahead of land releases. Developers are selling packages by ‘open negotiation’ to the highest bidder, without releasing listed prices, and online auctions have risen quickly in popularity, as they allow people to openly compete for properties.

Be aware that there is little room to negotiate anymore – whoever has the highest bid or the best financial situation gets the land. 

For those who have purchased land, there are genuine price increases due to the impact of COVID, however, there are also some builders using the threat of price increases as a scare tactic to push owners into signing contracts, so do your research before you sign anything. 

By being aware of the right questions to ask your builder, you can avoid costly oversights. For example, are all council requirements like BASIX included? If your builder strikes rock, is this covered? Is soil and tree removal included? 

Opting for a “fixed price turn-key” contract is the best way to avoid extra building costs. This means once the builder gets to the site, there will be no extra costs, so the price doesn’t alter in any way unless you want to upgrade.

The next 12 months will continue to have its challenges for the Hunter Regions’ building industry but it’s exciting to see our local property market booming and the opportunities this is bringing for our local businesses

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