An Australian trader has given some very honest opinions on why he shouldn’t buy new property in an ‘off-the-shelf’ housing development.
In a video shared on TikTok Monday, a whistleblower named Deacon lifted the lid on the shoddy finish of many homes like this, especially in recent years as builders grapple with massive work pipelines and rising material prices.
As a tradition, I would never buy a new build, especially after Covid. These houses are there to make three groups rich: banks, developers and artisans,” Deacon said.
The builder said that as someone who has worked on many properties like this, he is well aware that many developers do not prioritize quality, but want as many projects built and sold as quickly as possible.
A tradie has explained why he wouldn’t buy brand new kit-style homes post-Covid as builders grapple with huge work pipelines amid rising costs (stock image)
“Myself and other artisans who have worked on these sites know how poorly built they are and they basically give us work forever,” Deacon said.
“I do bathroom repairs in cracks and crown moldings that don’t even exist in my grandparents’ house built in the 1950s.
“And these houses aren’t even inhabited yet!”
He also expressed concern about whether the resale value would be comparable to that of suburban properties built decades ago.
“I don’t think you’re going to see the same return on investment with this new build as the previous generations did on theirs.”
“All these houses are exactly the same mirrors of each other with different colored floors and tiles.”
“With a unique build, of course, this doesn’t apply,” he said.
The tradies’ comments are even more concerning in light of governments now pushing to build massive bulk housing as a solution to rising property prices and the rental crisis.
The Albanian government is pushing its $10 billion Housing Australia Future Fund to increase housing supply.
The fund will provide 20,000 new social rental homes and will seek co-investment from state and territorial governments and private capital providers looking to make a profit.
In Victoria, the Andrews Labor Government has massively expanded the Victorian Homebuyer Fund, pledging $1.1 billion to triple the available support and “help thousands of Victorians achieve their dream of owning a home.”
Deacon said tradies will get rework of mistakes in many of these new buildings that better-made homes from decades ago wouldn’t get
While the NSW Government recently announced it would ‘accelerate’ five massive housing projects totaling 5,803 homes under its Rezoning Pathways Pilot programme.
But the sheer amount of work ahead will only add to the pipeline of many builders who have already “taken on more work than they can handle.”
Between July 2022 and April 2023, 1,709 builders went into administration — which insiders say can be traced back to the federal government’s HomeBuilder grant introduced by the previous administration in June 2020.
More than 130,000 customers signed up for the program, with builders mostly agreeing to take work on a fixed-price contract basis.
This means that when inflation hit and prices rose, builders spent more on materials and labor to get the job done than they had planned – to the detriment of profits.
Builders Collective of Australia president Phil Dwyer said the stimulus worked so well it put too much pressure on an already “heated industry” by overloading builders with work they couldn’t complete.
Supply chain problems erupted in 2022, spurred by the Russian invasion of Ukraine, which caused world prices for building materials such as steel and timber to soar.
Labor shortages also emerged, creating more demand for crafts, which paid them more and slowed the completion of work.
Along with a wave of wild weather in 2022 and rising inflation, builders had a huge backlog of work that cost them much more and took longer than they planned.
‘We saw a huge spike in demand for new homes and renovations,’ says Denita Wawn, the CEO of Master Builders Australia.
The federal and state governments are pushing for mass construction as a solution to the country’s property crises (photo of Victorian Prime Minister Dan Andrews and Housing Minister Colin Brooks at a social housing project under construction in North Melbourne)
“When the builders signed their contracts, which are normally fixed price, they didn’t anticipate the significant rise in inflation.”
“They knew the labor shortage would be bad, but they didn’t predict it would get this bad.”
“There is currently a fragility and volatility in the industry, which is due to companies working mainly on fixed-price contracts set before Covid,” she said.
Tim Lawless, CoreLogic’s director of research, likened it to builders being “oversubscribed” as homeowners scrambled to qualify for the grants.
An owner-occupier can receive a $25,000 grant under Homebuilder if they sign construction contracts before December 31, 2020 or a $15,000 grant if they sign before March 31, 2021.
For some construction companies working with a low cash ‘buffer’, pushing them into administration was enough.