Brickworks pushed through price increases on its products of around 9 per cent in the half year to January, supporting an underlying increase in net profit of 24 per cent. It will add another 7 per cent to those prices before the middle of this year.

The company has been able to ride the wave of building approvals that spiked during COVID in parts thanks to the federal government’s HomeBuilder program.

Once this pipeline is exhausted, house construction activity dries up. Victoria has the longest pipeline and Western Australia’s building from a wave of earlier approvals is about to evaporate.

Partridge said Australia’s detached housing starts fell 18 per cent in the six months ending January 31 compared with a year earlier. So, it’s clear that the music is winding down at this building party and the mood and risk appetite has turned.

Put simply, cost inflation and rising interest rates have hit affordability and confidence.

“People don’t want to make a commitment [to build housing] when they don’t know where interest rates will finish. If interest rates stop climbing and the environment becomes more of a ‘known’, I’m pretty sure demand will surge back,” Partridge says.

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If the queues of people waiting to inspect rental properties are any gauge, there is plenty of incentive for investors to start building residential properties.

The rental market is as tight as it has ever been, according to Partridge, who has been in the industry 40 years.

But how long will this strike on new housing last? Partridge thinks it will be short-lived and turn when there is some clarity on interest rates. “It might be a short, sharp downturn,” he said.

There is quite a long lag. It could be another six to 12 months before we see the result of the interest rate rises that have already been announced. But some building costs remain stubbornly elevated including labor, says Partridge, who bemoans that Brickworks can’t even get people to maintain its factories.

“There is not much use having an immigration policy bringing in doctors, nurses and IT specialists when they have nowhere to live. We need electricians, bricklayers and carpenters.”

He says the parents of Australia’s younger generation want them to be a lawyer or a doctor, but they don’t want them to be a tradesperson. “You can offer all the training in the world, but younger people are not interested in trades.”

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