With increasing construction costs and many builders finding it challenging to source the materials and trades they need, it’s no surprise if you’re wondering whether building now is the right choice. If you’re looking at house and land packages in Perth or considering building a home in Perth, there are still plenty of ways that offer you peace of mind to get your dream home built.
Why does the building market appear more volatile?
Several factors are affecting the current market’s volatility. For example, material costs have risen due to record inflation figures resulting from Covid-19. In addition, the war in Ukraine is also driving up the cost of fuel, and ongoing supply chain issues are causing delays and driving up prices.
Australia is also currently experiencing one of its most significant labour shortages. According to the Australian Bureau of Statistics, over 423,000 job vacancies are now available nationwide. With so much demand for skilled labour, tradies can choose who they work for, making it difficult for builders to secure consistent contractors.
Another issue is fixed-price contracts. While the certainty of a fixed price contract is desirable for many people looking to build for the first time, it is affecting the volatility of the building industry. That’s because a builder can’t change the lump sum amount you agree to pay with a fixed price contract. While this is great for the end consumer, it can affect costs considerably in a market with a skilled labour shortage and rising material costs, leading to financial difficulties for some builders.
How to protect yourself in the current market
While there’s always an element of risk involved with purchasing an existing house or building a new home, there are some steps you can take to help protect you.
Seek professional advice
Researching different builders and understanding their reputation and financial position is an excellent first step. Our downloadable checklist is a great place to start.
Seeking expertise from an independent third party, such as legal counsel or a new home building broker, is also a great idea, particularly if you’re relatively new to the building industry. Both can offer expert advice about the industry and help guide you through the process, including checking contracts, negotiating, and advocating on your behalf when dealing directly with a builder. Be sure to get recommendations and use a completely independent broker that isn’t aligned with an existing builder, like Better Way 2 Build.
Choose the right contract
You should also consider the correct type of contract for your build. As mentioned, a fixed-price contract can be an attractive option as a first-time builder to ensure you stick to your budget. Just be sure your builder has a solid reputation. Unfortunately, in the current environment, some builders are finding it necessary to win business to keep their business running, which means they can sometimes agree to a contract that’s not profitable for them. An unprofitable contract can lead to bankruptcy if they’re already in financial difficulty, leaving your build at a stand-still and costing you a lot more money in the long run.
Check insurance
In WA, builders are required to have home indemnity insurance to protect homeowners. This type of insurance also covers unsatisfactory or defective building work and can offer you peace of mind if your builder declares bankruptcy and leaves you mid-build.
Be realistic
Finally, it’s essential to be realistic with both your timeframe and budget. Again, speaking to a new home building broker can be a great way to assess whether your expectations are realistic or whether you need to reconsider your build.
What can I do if the worst-case scenario occurs?
If your builder becomes insolvent, it can be incredibly stressful. As part of your builder agreement, you should have received the home indemnity policy with all the details so you can contact the insurer directly to find out the next steps. To claim, you’ll need to contact the insurer within 180 days of your builder’s insolvency.
Use a building broker Perth
An experienced and independent building broker can help guide you through the process, explaining the various terms and conditions you need to understand and checking everything is in order before you sign any contracts.
When choosing a broker, it’s important to remember not all building brokers work on behalf of their clients, with many associated with specific builders. At Better Way 2 Build, we work as your advocate to ensure you get the best outcome possible for your dream home. We’d love to hear from you and help you on your journey. Simply fill out the form or give us a call on 0861186119.
