Already a subscriber?Australia has an abundance of space. However, most of us want to live close to a few large cities. It is this simple fact that has created significant wealth for those lucky enough to own property. For others, the Australian dream has become unattainable.
However, building accommodation that meets these criteria is extremely challenging given the high cost of land, building materials and the labour needed to construct – let alone taxes, which are a very high proportion of the cost of new builds.Each of these costs has risen substantially since the onset of COVID-19 and remains stubbornly high. Given the many and complex reasons underpinning this inflation, it is difficult to see them falling soon.
But novel approaches, while necessary, are still not sufficient. To be a low-cost service provider, it is essential to have a low-cost position yourself.That doesn’t just mean providing a service efficiently. Scale is often a vital factor in achieving a low-cost position as it dictates a “structural” level of costs. For housing operators and developers, this includes overhead costs like marketing, operations and administration where bigger translates to lower overhead costs per unit.