Building costs can blow out

Discussion in 'Development' started by MTR, 14th Apr, 2021.

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  1. MTR

    MTR Well-Known Member

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  2. Gen-Y

    Gen-Y Well-Known Member

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    Guys and Gals.. this is really serious now. :eek:
    I am not sure who will go under soon.
    Lots of noise.. all you guys who have signed contracts and are going to build.

    My humble opinion only - do your own research.
    Hold until 2023 mid year before even attempt it.
     
  3. Coota9

    Coota9 Well-Known Member

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    What a kick in the guts for all those builders who through no fault of their own will go bust over the next 6-12 months..
     
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  4. Investor1111

    Investor1111 Well-Known Member

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    Building in Geelong in a couple of months, my butt is clenched.:eek: Talked to my builder the other week. There tracking okay (or at least ive been told) given current market conditions.

    Builder's going variation, as opposed to fixed in terms of how contract is written up, would allow to past the rising costs to the customer? But then they might receive less business, if people dont want to take on that risk.

    Can still see land getting snatched up, these guys either have there head in the sand or have balls of steel. One of the two haha
     
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  5. Gen-Y

    Gen-Y Well-Known Member

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    Trust me.. no builder will tell you they are in a bit of a pinch. Till it is one foot in the grave.
    Just be observant, if lack of communication and can’t keep on time. Red flags and your ears should be perked up.
     
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  6. MTR

    MTR Well-Known Member

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    Slow and steady
    Roof height complete
    Unit 3 at lock up

    Unit 3 at different stage due to supply issue

    Good communication with builder, but supply issues in current environment is the norm
     
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  7. Squirrell

    Squirrell Well-Known Member

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    Mtr. Whats an indicative range in perth now for build of turnkey mid spec 3 × 2 x2 house (180sqm) on a 300sqm battle axe block?
     
  8. MTR

    MTR Well-Known Member

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    to be honest no idea. All I know is build costs gone up 40%. My builder has not hit me for additional costs

    I know an investor who started a 3 villa deve in Morley. Original price $720k increased to $900k.
     
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  9. MTR

    MTR Well-Known Member

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    You would think with build costs skyrocketing end values should be doing the same?

    For this project in Willagee I did the numbers on $550,000-580,000 each villa. Today I would say $650,000 each villa and rising

    I also reviewed rents, at start of deve $465 pw each villa, today $600 pw rent each villa and rising.

    Lets see where its at by end of 2022. I expect ongoing price increases. However, I have noticed more deve in the area.
     
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  10. MTR

    MTR Well-Known Member

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    Update

    This has made my day

    Just been advised by top selling agent that if I was selling we would start selling with offers over $700,000 each.

    Not enough stock and huge demand from downsizers in this suburb
     
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  11. Propin

    Propin Well-Known Member

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    Will you be tempted to sell any or holding onto all?
     
  12. MTR

    MTR Well-Known Member

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    no wont sell. Its a nice product

    The rents are also soaring and with depreciation of $7k per villa its attractive to hold.

    would have to pay gst, cgt ….even though purchased in our trust still makes sense to hold

    After 5 years no GST.
     
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  13. Rooky

    Rooky Well-Known Member

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    That was my understanding too. Last brand new villa was sold in Oct 2021 for 640k and market has moved higher around 10% or so. Willagee is very much in demand.
     
  14. Rooky

    Rooky Well-Known Member

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    I feel that GST cost for developer is overhyped. Its just another cost item for doing business. If you use margin scheme, its almost same as selling cost. For small projects, generally, GST and selling cost works out to be appx 5% or less.
     
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  15. Coxy89

    Coxy89 Well-Known Member

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    It's only expensive if you don't know about it and don't purchase with the right conditions. It's an easy one to miss though without the right advice
     
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  16. MTR

    MTR Well-Known Member

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    Agree
    Just part of business
     
  17. MTR

    MTR Well-Known Member

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  18. MTR

    MTR Well-Known Member

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    At Roof height.
    Plastering and rending done

    Now we are cooking. Completion date expected. October 2022

    Delighted with the product and design
     
  19. MTR

    MTR Well-Known Member

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    Update
    Carpentry work/cabinets will be completed in July

    Interesting to note, my builder has 2 other development on the go, in this suburb. Same product, however lower specs now contract cost of an additional $175,000 (3 villas)
     
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  20. Investor1111

    Investor1111 Well-Known Member

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    Fair to say, you will be targeting the established market now moving fowards. Especially if your still bullish on Perth :) @MTR