When Jack Henderson bought a patch of land by the Hawkesbury River in Sydney’s north-west last July, he knew he would have to deal with occasional flooding, having lived in the area most of his life.
But the once-in-a-100-year flood event in the past month had caught him off guard, just like many residents in the area.
Home builder Jack Henderson said he’s expecting long delays and higher construction costs due to high demand and labour and material shortage. Louie Douvis
“I grew up in the area and lived here for 20 years, so I know that it gets flooded every now and then, but I’ve never seen it this bad,” Mr Henderson said.
“I’ve never seen the river get this big and destroy so many properties. Since I’ve bought the property, it’s been flooded twice.”
Mr Henderson, who founded Sydney-based buyer’s agency Henderson Advocacy, said he planned to build a luxury riverside holiday home that he could partly rent out through Airbnb, but was now unsure when he would be able to start.
“I know that the council will be busy dealing with the flood damage, so I’m expecting long delays getting a development application approved,” Mr Henderson said.
“They’re also likely going to change a lot of the flood regulations, so probably more stringent on what they approve. I’m also expecting to pay higher construction costs because of the high demand and shortage of labour and materials. So for now, I’m focusing on getting approval to build the boat shed, so at least I can start using it.”
CoreLogic head of insurance solutions Matthew Walker said based on past significant events, individual building element costs could increase by as much as 300 per cent, and labour rates for specialist trades could rise by double or more for long periods after the event.
“These rates are partly a factor of the event’s location and distance to major centres,” he said. “The expected range of additional cost for a full rebuild, based on our past experience, is in the region of 20 per cent to 50 per cent.”
Before the flood inundated his property, Mr Henderson had already spent more than $200,000 in landscaping and building an al fresco kitchen.
“All the work that I’ve done has been wrecked, and obviously it’s costing me money because at the moment, it’s still a vacant block of land, and there’s also opportunity cost, so it’s a huge setback,” he said.
“But I’m fortunate, compared to a lot of my neighbours down the street because it’s not my primary residence. Some of these people were weeks’ away from moving into their new homes when the flood hit. Now they’re likely to wait another three to four years because there’s no available builder that the insurer has approved that can do the work.”
Flood scenes from Wilberforce and Windsor on the Hawkesbury River as flood levels peaked on March 9, 2022. Dean Sewell
UDIA national president Max Shifman said getting to the point when homeowners could actually rebuild would be challenging.
“I think the actual building will work itself through, but it’s just such an administrative nightmare to get to the point where you can actually build something,” he said.
“There needs to be some pretty rapid changes to how that’s done, preferably permanently, but even in the short term, just to get through this to let people rebuild their lives. The challenge in NSW is that the councils are more involved in the building approval process, so if new measures are introduced, that’s only going to further exacerbate the challenges of rising costs and longer timeframes.”
RLB Oceania research and development director Domenic Schiafone said contractors and subcontractors had become somewhat selective with tender opportunities, given the amount of activity in the marketplace with many at capacity.
“The increased activity in the residential sector generally has resulted in lack of capacity across groundwork and structural trades with labour, plant and equipment shortages leading to resourcing challenges,” he said.
Despite the prospects of higher construction costs and long delays, many residents in Mr Henderson’s area were refusing to sell up and leave.
“When you live near the water, you have to take the risk versus reward into account,” he said.
“For me, and obviously all the people who live on that street, the reward is much greater than the risk because none of those people are selling their properties. They’re more than happy to put up with the inconvenience.
“Of course, property values will take a hit because the flood is going to put a damper on the buyer’s sentiment. But in 12 months time, assuming no more major flooding, this will be forgotten and people will move on with their lives.
“So the flooding has not significantly changed my goal and plan of eventually building a holiday home, even though it will take longer because I already made the initial investment.”
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