Helping Investors Streamline Perth Property Projects with Insider Tips for Timely and Cost-Effective Construction
Investing in property represents a significant financial and time commitment, especially when building from scratch. In Perth’s current market, selecting the right builder is paramount to the success of your investment project. With concerns over construction timelines and builder reliability at the forefront, making an informed decision is crucial to ensuring your investment yields the returns you expect.
Simon Evans, Building Consultant from B1 Homes offers valuable insights into navigating the complexities of builder selection.
Here’s what you need to know:
Key Considerations
When embarking on a construction project, there is often two primary concerns: construction duration and builder stability. Clients (whether that be a first-home buyer or seasoned property investor) want to know how long the construction process will take and whether the selected builder is financially stable to see the project through to completion.
Price vs True Cost
While cost is undoubtedly a significant factor in selecting a builder, it is essential to look beyond the initial price, and instead consider the “true” cost of the investment. Opting for a builder solely based on the lowest upfront cost may prove to be more costly in the long run. The true cost encompasses various factors, including:
- The length of the administration period (i.e. how long it will take the builder to get the job to site).
- How long the construction timeframe will be, which dictates when rental returns will commence; and
- The potential price increases or variations after contract signing.
By evaluating these factors comprehensively, property investors can gain a clearer understanding of the overall investment and make informed decisions accordingly.
Moreover, while builders based in the eastern states typically offer fixed-price building contacts, in WA, such contracts are not as common.
Although some builders in WA advertise prices fixed for 6-12 months, these guarantees can often come with clauses that account for factors beyond the builders’ control, such as shortages in labour or materials. While the price hold usually covers the base house price, there may be additional variations on top of this.
The Cycle of the Homebuilding Sector: 1990 – 2023
Selecting a Secure Builder
One of the hallmarks of a reliable builder is their financial stability. Builders with robust financial backing are better equipped to navigate cash flow challenges and maintain a steady rate of construction, even amid market fluctuations. Assessing the builder’s level of indemnity insurance is equally as important. Adequate insurance coverage not only protects the builder but also instils confidence in clients, assuring them of the builder’s ability to fulfil their contractual obligations.
Market Insights: Construction Challenges in WA
The current housing crisis in WA places immense pressure on builders to meet escalating demand while contending with resource constraints. The housing crisis is owed largely to the disruption caused by COVID-19, whereby the construction industry saw a spike in building approvals yet lacked the resources to complete the projects.
Reports also indicate a rise in builder insolvencies. In the 2022-23 financial year, 132 construction businesses in Western Australia alone entered external administration or had an administrator appointed, compared to 93 in the previous year. These figures underscore the challenges of maintaining financial stability amidst market volatility.
How can Westcoast Property Invest help?
As the market continues to evolve, it is imperative that property investors prioritise builders with a proven track record of stability and reliability. Westcoast Property Invest serves as a valuable resource in navigating builder selection. Leveraging our industry knowledge and network, we can facilitate informed decision-making, ensuring optimal project outcomes. Our relationship with established builders can offer a level of assurance and expertise that is invaluable in today’s competitive landscape.
In summary, selecting the right builder is a critical step in ensuring that construction progresses on time and on budget. By considering factors such as timeline, builder reliability, and market dynamics, property investors can make informed decisions that set the foundation for project success. In a market characterised by complexity and uncertainty, choosing the right builder is not just about building structures – it’s about building trust, confidence and a foundation for future success.
For personalised guidance in selecting the right builder for the construction of your investment property, contact Westcoast Property Invest today, as your local residential property experts on the ground in WA.
References:
https://www.apimagazine.com.au/news/article/wa-government-throws-interest-free-lifeline-to-builders
https://www.abc.net.au/news/2024-01-13/wa-housing-crisis-government-measures-not-working/103286144
