Record demand and continuing pain for housing developers

A developer with record enquiry levels and over 350 residential lots being built is facing three major pain points including having to compete with state government’s massive wallet for workers.

James Fitzgerald, managing director of JLF Group, said there were several pain points for land lot builders at the moment including the approvals process, funding, and high cost of labour and supplies.

“We are building 68 lots in Logan Reserve, 16 lots in Yamanto and about to kick off 75 lots in Holmview,” he said. “We have a further 200 across three different developments that we will aim to kick off next financial year.”

Developer James Fitzgerald of JLF Group at the site of his new development at Logan Reserve. He is creating over 150 home sites in the Greater Brisbane region this year alone. Picture: Lyndon Mechielsen/Courier Mail

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“When you get projects started, the demand is very strong,” he said. “We have record amounts of enquiry and sales activity across all projects. There is a desire for cheaper, smaller products which demonstrates people are seeking out affordable housing (sub-$800,000 price point).”

He said construction has improved but still takes longer and is more expensive than they’d like.

“This is due to competition between private industry (our builders) and public industry (government) for the same pool of labour and supplies,” he said.

“Record infrastructure spend and commitments means more competition for same labour, and we can’t afford to have cost plus contracts like the Government can so inevitably are second served at the table when it comes to labour and supplies.”

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Mr Fitzgerald said “it’s hard to get projects started”.

“Council and State approvals take longer than they should. We feel this is a resourcing issue and lack of co-operation between councils and states (that is, not on same page). Constantly dealing with further information requests where questions are asked that could have been asked and responded to first time around. Constantly finding State and Council at odds on matters such as environment, infrastructure and density.”

Funding was also much tighter now, he said.

“Developers and businesses are no different to home buyers when it comes to borrowing money. They need to demonstrate an ability to service the debt, along with a buffer on current interest rates. We can’t borrow as much money as we could when interest rates were lower and responsible lending settings not as strict.”

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