Construction Prices Increased?

Hi guys,

I hope you are having a good time.

Just wanted to share our spoiled Sunday evening by "the builder". We received a call from our builder for which we signed up last year in Nov, paid $2500 as an initial deposit, which I guess supposed to be the "final price lock" money as their sales person had mentioned that time.

So, the call was about to let us know that their base prices are going to be up by $44000 just in 2 weeks time. A week ago I was talking to their sales person who didn't mention anything about it.

Their first base price is $290000, that we were expecting to go with.

Suddenly they asked us to pay $440000 or get our $2500 refund.

Our construction is yet to be commenced.

Just wanted to ask here if anyone have recently been noticing anything like this. Didn't initial deposit means we are locking final price for construction?

Your suggestions will be appreciated.

 

You just have to ask yourselves as this property has increased 150k in construction cost's, how may more extra payment till the building is complete..
Maybe walking away with your deposit and starting again but that's your decision. Good luck.

 

Have you had your head in the sand?

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There must be a rise and fall clause in your build contract? Builder maybe has the right to adjust prices which suit current market conditions for materials / labour.

 

I would have if I had, but then hit my head with the wall

 

Has it gone up BY 44k (from 290k to 334k), or gong up TO 440k from 290k?

Cost of building materials going up, and delays, is a real thing right now.

 

The contract was yet to be signed. I was after them to get it done asap but the delay means they were going to shock us.

I know there is a rise in construction price but $44000? Its hard to digest.

 

Gone up from 290k to 334K.

$44000 rise. Can they actually raise this much even after we paid the initial deposit as they said this would be the final price?

 

Read your contract. Did you get a lawyer to advise you on it?

 

Your deposit was likely to hold your place in queue & secure them as the builder. You have nothing in writing & no contract signed. Prices for labour & materials have shot through the roof, the builder is, of course, going to increase their prices to cover for this.

 

We don't have a contract yet, yes we were told that prices will go up, but we didn't expect this much.

 

She mentioned they are also going to raise the prices for those who have signed the contract with them. This is absurd.

 

why is it absurd? The cost of labour & materials has gone up significantly, are you expecting the builder to swallow the cost? Their contracts would likely state that they are able to increase the price in certain circumstances as this.

You were also told that prices were going to increase ahead of time. I’m sure the builder didn’t know the exact figure at the time so they couldn’t advise you.

 

Of course, they mentioned the price, but no one expected they'd increase 50k from nowhere.

 

IMO - you have got off lightly with only 15% increase.
I work in the construction game for 20 years now. I can tell you prices have risen 30%+ since 2020.
There is a rumour another 20% by end of 2022.

 

so would you rather 1 big increase or 5 smaller increases? In the end you’ll still end up with the same increase, builder has to cover themselves.
There are many going through the same thing as you, and many more after you. That is the current landscape of the industry.

 

"Fixed Price" & "Turnkey" are things you want to see in writing to cover your backend in the future. Need a lawyer to break down these contracts, so you understand just how heavily favoured they are for builders, and to negotitate things, get things modified, added, struck out that are in YOUR best interest.

Kinda agree with WIllair here. Walking away and losing your $2500 is a drop in the pond, when it comes to getting your build sorted by a builder that is reputable, "Fxied Price & Turnkey" and does a quality finish and in reasonable time frames for your investement property.

 

Or you could end up like some very distress would be home owner / investor. When your builder goes bust and can't complete your construction project.

Being in my position - I am hearing so many rumours in Sydney and Queensland. It makes your head spinning dizzy.

OP make sure you have checked out your builder are solid, you don't want to end up on Current Affair story night news.

 

It's VERY common at the moment, build costs have increased significantly and lots of people are getting the same call as you.
Unfortunately not much you can do about it, builders cannot afford to build houses for free or at a loss.

You don't have an executed contract but even if you had paid your full deposit there's no guarantee on the price being "locked", even fixed price contracts have clauses that allow the builder to increase prices after a certain amount of time (usually 60 days or so, in QLD at least) so if you buy a block of land that does not registered for 6 months you can find the build contract price is no longer valid.
Really need to choose your builder wisely, you don't want to end up with a half built house and a bankrupted builder.