Ask any builder how busy they are right now and they’ll tell you they’ve got more jobs than Scott Morrison gave himself during the pandemic.

Detached housing approvals soared to all-time highs in 2021, creating a pipeline of construction projects extensive enough to sustain the industry for years even as demand for new housing begins to slow.

But while building is booming, business isn’t. The construction sector has been hit by a wave of construction firm collapses this year (including Probuild and Condev), citing pandemic-related supply chain issues, covid-related labour shortages, and cost increases for labour and materials (namely timber, which has doubled, and in some cases, tripled in price) as the culprits. Rising costs have swallowed margins on fixed-price contracts as none of these unexpected problems can be passed on from the business.

Add construction delays caused by the record-breaking rainfall along the east coast and the result is a ‘loss-making boom’ for the building industry.

The cost of a new house rose by a record $76,715 between April 2021 and April 2022, lifting the average value of new homes approved over the $400,000 mark nationally for the first time. Presuming most of those new house buyers had entered into fixed price contracts with their builders before costs surged, that’s $76,715 now left to the latter to have to account for. And for many construction firms, it’s proving impossible.

Across Australia, there have been dozens of major home builder collapses, with Metricon, one of the country’s largest construction firms, having to be bailed out for $30M to keep doors open. And it’s forecast the trend will continue.

The end of Prime Minister (…of health, finance, home affairs, treasury and industry) Scott Morrison’s HomeBuilder grant—which drew thousands of buyers into the new home market at fixed price contracts—combined with surging costs in the construction sector is expected to continue to cause a significant decline in building approvals throughout the rest of the year. This April, dwelling approvals were down 32% from April 2021.

The lack of approvals is also due to the fact that most builders and subcontractors are at workload capacity, with timelines already well blown out due to unexpected circumstances like weather (La Niña’s really starting to outstay her welcome) and long wait times on imported materials, making it impossible to lock in schedules for new builds.

Meanwhile, supply chain issues have seen costs for some housing materials triple, with delays on basic items like toilets and vanities leading to longer project times that cut into labour availability and wages. The Master Builders Association of NSW reported that the cost of materials increased by a significant 4.2% during the first quarter of 2022, a 15.4% increase from the year before.

So, what’s the takeaway? Maybe next time you’re at Bunnings, shout a builder a sausage sandwich. Though as of last month even they’ve shot up in price, from $2.50 to $3.50. Is nothing sacred?