Perth Builders Face Supply Crisis as Material Costs Soar 40%
Building Industry News Perth reveals a worrying trend with material costs surging by a staggering 40%. Apartment demand has fallen sharply, which depressed housing approvals in April. These challenges have made prefabricated homes an increasingly attractive alternative.
Perth’s construction sector struggles with persistent labor shortages that make the material problems even worse. The HIA warns that Western Australia’s housing shortage crisis might last until 2030. Several WA builders have collapsed in recent months, which raises serious concerns about the sector’s stability.
The proposed student tower in Perth could become one of the most modern developments, but it represents just one project in a broader crisis. This piece will explore how these material cost increases affect different sectors and what steps are being taken to fix them.
Material Costs Surge 40% Across Perth Construction Sector
Perth’s construction materials have seen record-breaking price increases since 2020. Structural steel prices have jumped by 39.5% per tonne, and plasterboard costs have shot up 35.3% per square metre. The timber market has also seen a 35% price surge. These changes mark the worst materials shortage we’ve seen in 40 years.
Which materials are most affected?
Key structural building components have taken the biggest hit. Builder’s labour costs for brickwork have jumped between 30-50%, while fabric reinforcement prices have climbed by 50%. Steel products have gone up by 25%. The concrete market keeps getting more expensive due to its energy-heavy production process. The timber shortage became worse after Australian bushfires destroyed tens of thousands of hectares of softwood plantation.
How builders are absorbing or passing on costs – Building industry news Perth
Perth builders now use smarter buying methods to handle rising prices. Some construction companies give their clients fixed-price lump sum contracts for protection. Others have started to broaden their supply sources so they don’t rely on just one supplier. Local builders say they can’t pass all these price increases to customers, especially when they have cashflow concerns. Some have switched to steel frames instead of timber, but this change has created its own challenges.
Recent data from industry bodies and suppliers
The Australian Bureau of Statistics shows house construction material prices went up by 40.8% between September 2020 and June 2024. Master Builders Association WA says these problems exist across the state. The CoreLogic Cordell Construction Cost Index reveals construction costs in WA rose 0.2% during the September quarter. Perth has become Australia’s most expensive city to build in, with a 14% cost increase from last year.
Several factors pushed these prices higher. Supply disruptions from the pandemic created shortages. The Housing Industry Association reports builders completed a record 146,000 new detached homes in 2021—20% more than the previous year. The government’s HomeBuilder scheme and low interest rates drove up demand. Labour shortages and rising energy costs made these problems even worse.
Why Labour Shortages Are Worsening the Crisis
The construction industry in Perth faces a critical labour shortage crisis. The sector deals with an unprecedented workforce challenge that combines with skyrocketing material costs to create a perfect storm for Western Australian builders.
Skilled trades in short supply
Building Industry News Perth shows the city has the most severe trade shortages among Australian capital cities (-0.84). Bricklaying (-0.93) and ceramic tiling (-0.91) have become the most affected trades. Bricklayers now demand between AUD 4.28 and AUD 5.35 per brick, a massive jump from 75 cents five years ago.
Master Builders Australia estimates a need for 130,000 additional workers nationwide. Western Australia needs 55,000 more construction workers by 2026. Apprenticeship completions dropped 15% in 2023, while new starts fell 22% compared to 2022.
How labour and material issues compound delays
Workforce and supply shortages create a snowball effect on construction projects. Project timelines have stretched dramatically across Perth. Labour shortages drive building costs even higher, along with material cost increases of 40%.
Perth leads Australian cities in construction cost growth, with labour expenses as the main driver. Trade prices rose 5.5% in the 12 months to March 2025, while broader Australian wage growth stayed around 3%.
Many builders don’t survive these mounting costs. More than 1,300 Australian construction companies went into liquidation or administration late in 2023.
Insights from construction unions and training bodies
The CFMEU challenges claims about widespread shortages and points to vacancy rates below 1% for most construction trades. The union advocates radical tax reform to tackle housing affordability issues.
HIA suggests different solutions through apprentice subsidies, employer incentives, and simplified visa programmes. Both groups recognise the systemic challenges despite their different approaches.
The federal government introduced a AUD 15,289.90 incentive scheme that targets apprentices entering housing construction. Employers can receive hiring incentives up to AUD 7,644.95 during an apprentice’s first year.
Government and Industry Bodies Call for Urgent Action
The Western Australian government has created a three-stage reform package to help building industry news Perth construction firms survive. We focused on tackling mounting industry pressures through targeted help. Government responses are the foundations of recovery efforts.
What the WA government is proposing
Finance Minister Sue Ellery unveiled the Safe and Fair Reform Package after talking with industry leaders. The plan will roll out between 2024-2026 and starts with immediate payment reforms. The government provides interest-free loans up to AUD 458,697.07 to builders who complete delayed projects.
The Cook Government has opened tenders for over 1,000 new social and affordable homes. The state will invest AUD 677.34 million in upfront capital. These projects will create long-term jobs throughout Perth metropolitan areas.
HIA and MBA responses to the crisis
Housing Industry Association highlights that Western Australia needs 83,000 additional trades workers to meet housing targets. Currently, only 4,229 temporary skilled workers fill home building trades nationwide. HIA wants dedicated construction visas to bring overseas tradespeople.
Master Builders Association WA says procurement reform must prevent more insolvencies. They believe the current “lowest price wins” approach has made the crisis worse. MBA WA also wants contract formats simplified with fair provisions for everyone.
Calls for subsidies or import relief
Industry bodies want complete government intervention packages. After recent discussions, these organisations promote:
- Tax incentives for trades employing international labour
- Stamp duty rebates for interstate transferees
- Efficient visa applications for skilled workers
- Expanded Construction Training Fund programmes
Western Australia’s Construction Visa Subsidy Programme helps companies with financial support for migration costs. Employers can get funds for recruitment, visa applications, and relocation expenses. HIA and MBA continue asking for more relief while building approvals stay at record lows.
Conclusion
Perth’s Building Industry Faces Unprecedented Challenges
The construction sector in Perth has reached a turning point. Material costs have jumped 40% since 2020, which affects steel, timber, and other essentials. On top of that, builders now tell clients to expect wait times of more than a year for new homes. The situation gets worse with labour shortages, as bricklayers now charge up to AUD 5.35 per brick.
These problems have hit Western Australia’s building industry hard. Perth faces a housing shortage crisis with many projects at a standstill. The crisis deepened when more than 1,300 construction companies went into liquidation across the country in late 2023. Both builders and homebuyers now face a dire situation.
The government has started to step in with targeted help. Struggling builders can now access interest-free loans up to AUD 458,697.07 to finish delayed projects. The Construction Visa Subsidy Programme helps companies hire workers from overseas.
Industry groups say we just need more complete solutions. HIA reports Western Australia urgently needs 83,000 more trades workers. The Master Builders Association wants changes to move past the “lowest price wins” mindset.
Success depends on everyone working together. The construction industry in Perth must find new ways to handle these challenges. The housing shortage in Western Australia could last until 2030 if left unchecked. Quick action will help stabilise Perth’s building sector for future generations.
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Building Industry News Perth – FAQs
Q1. How much have construction material costs increased in Perth? Construction material costs in Perth have surged by approximately 40% since 2020, with structural steel prices jumping by 39.5% per tonne and plasterboard costs rising by 35.3% per square metre.
Q2. What is causing the delays in home construction in Perth? Delays in home construction in Perth are primarily due to supply chain disruptions, material shortages, and labour shortages. These factors have extended project completion times from 24 weeks to 60 weeks in 2022.
Q3. How are builders coping with the rising costs? Builders are implementing various strategies to cope with rising costs, including offering fixed-price lump sum contracts, diversifying supply sources, and in some cases, switching to alternative materials like steel frames instead of timber.
Q4. What action is the Western Australian government taking to address the construction crisis? The WA government has launched a three-stage reform package, which includes offering interest-free loans up to AUD 458,697.07 to builders completing delayed projects and investing AUD 677.34 million in new social and affordable housing projects.
Q5. How severe is the labour shortage in Perth’s construction industry? The labour shortage in Perth’s construction industry is critical, with the city facing the most acute trade shortages among Australian capital cities. Western Australia alone requires an additional 55,000 construction workers by 2026 to meet demand.