According to a study by MCG Quantity Surveyors, landowners are able to take advantage of cheaper construction costs as part of the COVID-19 epidemic.
Marty Sadlier, director of MCG Quantity Surveyors, said that the construction industry has become very competitive due to the economic impact of the epidemic.
"We are working with builders now where we simply cannot get their costs as per the usual analysis. For example, we have a builder who is building a residential unit development for 2.5 million of dollars, and our QS assessment indicates that it should be 2.8 dollars. m, "he said.
Sadlier said the current situation in the building industry is similar to what happened during the global financial crisis. However, homeowners should take advantage of the situation as quickly as possible, as recovery may well be imminent.
"With the current crisis, it is more likely that easing restrictions and perhaps a medical solution will quickly boost confidence. This tells us that the window of opportunity for homeowners to benefit from low construction costs is limited, "he said. "If you are considering building a builder, now is the time to do it. You have their attention 100%, and they don't trade your work for another potential customer."
Read also: Support for owners during COVID-19
The study found four factors that influenced the decline in indicated costs: a decrease in workflow, reduced margins, the drop in prices for subcontractors and cheaper materials.
Sadlier said that about half of the builders saw a slowdown in incoming work.
"While some have projects locked in for the rest of 2020, four of the nine had projects nearing completion and are now struggling to find new work. Some have also had to stop working in because of the rules of social isolation, "he said.
The most affected are the manufacturers who target mom and dad investors. Sadlier said the epidemic had damaged the personal finances of many homeowners, delaying their plans for possible construction projects.
Given the limited work in the pipeline, manufacturers have become more willing to sacrifice profit margins.
"This was made more evident given that seven of the nine interviewees confirmed that they were considering or had already reduced their margins in order to earn work. Despite this, some were already losing work to the benefit of 39; others citing at a price below cost, "Said Sadlier.
Many subcontractors have also decided to reduce their hourly rates while they are trying to secure their jobs. Sadlier said it was made worse by the closure of major projects.
"This means that prime contractors are able to find sub-contractors at extremely competitive rates, and that these savings are passed on to customers through lower quotes in order to save work," said Sadlier.
Materials which have become cheaper and easier to find contribute to lower construction costs.
"The general consensus is that for staples such as flooring or masonry, suppliers are now more competitive, but specialty items such as fixtures or imported finishes were less likely to see price reductions "said Sadlier.
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