Trades availability is at the lowest point since measuring began, according to a report released by the Housing Industry Association.
The HIA Trades Availability Index released last Friday reports a decline from -0.9 to -0.92 in the June 2022 quarter, revealing a persistent skilled trade shortage across all regions in Australian according to HIA economist Tom Devitt.
“Any number below zero indicates a skills shortage and this result reflects the most significant shortage since the inception of the report in 2003,” said Mr Devitt.
He said as of March this year, there were more than 100,000 houses under construction across Australia, almost 80 per cent higher than pre-COVID levels, with limited access to skilled trades from overseas putting further strain on resources.
“In recent months, we have seen improvements in several international and domestic supply chain indicators, including an easing in shipping container, oil and timber prices,” Mr Devitt said. “Central banks around the world are also increasing interest rates to reduce demand and combat inflation, and households are shifting their spending back towards services like travel, entertainment and dining out.”
However, he said access to skilled labour was continuing to be problematic.
“Job vacancies are at record highs in every industry and shortages of skilled trades are likely to persist into 2023, if COVID-related staff absences continue, and overseas workers only slowly return,” Mr Devitt said.
The trades in shortest supply were bricklayers (-1.51), carpentry (-1.34) and roofing (-1.26) with regional Western Australia (-1.13) and Adelaide (-1.11) the hardest hit areas.
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Mortgage holders should brace themselves for more pain as the Reserve Bank of Australia board prepares to meet tomorrow for the first time this year.
Most economists and the major banks are predicting a rise of 25 basis points will be announced, although the Commonwealth Bank suggests that the RBA may take the unusual step of a 40 basis point rise to bring the interest rate up to a more conventional 3.5 percent. This would allow the RBA to step back from further rate rises for the next few months as it assesses the impact of tightening monetary policy on the economy.
The decision by the RBA board to make consecutive rate rises since April last year is an attempt to wrestle inflation down to a more manageable 3 or 4 percent. The Australian Bureau of Statistics reports that the inflation rate rose to 7.8 percent over the December quarter, the highest it has been since 1990, reflected in higher prices for food, fuel and construction.
Higher interest rates have coincided with falling home values, which Ray White chief economist Nerida Conisbee says are down 6.1 percent in capital cities since peaking in March 2022. The pain has been greatest in Sydney, where prices have dropped 10.8 percent since February last year. Melbourne and Canberra recorded similar, albeit smaller falls, while capitals like Adelaide, which saw property prices fall 1.8 percent, are less affected.
Although prices may continue to decline, Ms Conisbee (below) said there are signs the pace is slowing and that inflation has peaked.
“December inflation came in at 7.8 per cent with construction, travel and electricity costs being the biggest drivers. It is likely that we are now at peak,” Ms Conisbee said.
“Many of the drivers of high prices are starting to be resolved. Shipping costs are now down almost 90 per cent from their October 2021 peak (as measured by the Baltic Dry Index), while crude oil prices have almost halved from March 2022. China is back open and international migration has started up again.
“Even construction costs look like they are close to plateau. Importantly, US inflation has pulled back from its peak of 9.1 per cent in June to 6.5 per cent in December, with many of the drivers of inflation in this country similar to Australia.”
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