As global construction explodes, Australian home builders face project delays due to a shortage of building materials exacerbated by the impact of bushfires and high steel prices.
Key points:
- Builders say there are delays in sourcing some building materials
- 2021 is set to be a banner year for single-family home construction, but demand is expected to slow later in the year
- Local production of some products is also increasing
David Davenport runs a construction company in Hobart, where it took him a week to get engineered lumber known as LVL (laminated veneer lumber).
Now it takes three months.
“The deadlines were pretty tough,” Davenport said,
“And we’ve had jobs that we knew we had for months, we know we’re going to start them, and then we get halfway there and there are still no materials available.”
Builder Luke Eiszele said he was waiting up to 10 weeks longer than usual for glue-laminated timber beams, trench trellises and steel, causing potential delays for the project.
“This means that we have to plan a lot more in advance and plan our jobs accordingly and always check with our suppliers our delivery times before starting a job.
“And let our customers know that there could be delays and that we are working with them and with the suppliers to get it as quickly as possible,” said Mr. Eiszele.
He said construction companies had to multitask to get the job done and finish them when the materials eventually arrived.
“Because if we don’t have materials, we don’t have jobs.”
Some lumber suppliers have told their customers they cannot provide quotes for floor and wall framing materials, other suppliers have warned of project delays or the possibility of redesigns using materials. different.
“Perfect storm” of supply and demand
Matthew Pollock of the Master Builders Association said the shortages were affecting commercial builders, but the home construction industry was feeling worse because of the increased demand.
“So we’ve seen a mini real estate boom emerge over the past six months, and that’s in large part thanks to the government’s stimulus measures,” Pollock said.
To keep businesses operating during the pandemic, the federal government designed a HomeBuilder program, providing homeowners with grants worth tens of thousands of dollars for new home construction or substantial renovations.
There have been over 120,000 grant applications since they were disclosed in June.
Mr Pollock said the current situation was “a bit of a perfect storm” with supply and demand.
“It’s great to see this activity brought to market, but unfortunately it has slowed down with some challenges in the supply chains,” he said.
Low interest rates have also encouraged home builders and renovators.
And there have been construction booms overseas.
The Black Summer bushfires also destroyed tens of thousands of acres of softwood plantations that are believed to have supplied the construction industry over the next 12 months.
Australia imports about 20 percent of its timber requirements.
The price of steel has also increased, making it difficult for builders like Luke Eiszele to quote and plan ahead.
“The risk is that the [price of] the materials go up, and we have a fixed price contract, and we would lose that on our margin, ”he said.
“Our steel supplier is advising us to make sure we factor the increases into our quotes.”
Mr Eiszele said some builders order supplies in bulk and then store the products in warehouses.
Short-term shock is expected to subside
Housing Industry Association economist Angela Lillicrap said 2021 is expected to be a banner year for single-family home construction, reaching over 146,000 by December.
This is 20% more than the previous boom of 2018.
But she said Australia was experiencing a short-term shock.
The federal government has already changed the required start dates attached to HomeBuilder grants, giving builders an additional 12 months to begin construction from the time of contract.
“This will help alleviate some of the pressures that have been placed on the industry,” Ms. Lillicrap said.
