Building material shortage – builders bust

18/06/2021

Timber, bricks and windows are just some of the building materials – now in short supply – that are leading to significant delays in renovations and new home builds.

It seems Australians are now investing more in home renovations instead of overseas holidays which is creating a construction boom. However, this has led to a worldwide shipping container shortage. Alongside this the 2019/20 summer bushfires destruction of softwood plantations has also fuelled demand for materials and created supply issues, according to the Master Builders Association of Victoria.

According to The Age, perfect storm of global events is seeing builders hampered by costly delays.

GJ Gardner Homes franchise owner in East Gippsland, Michael Ellett, said that a four-bedroom house that previously took four months to build was now taking between six and 12 months to complete.

“We could have a house sitting there for two to three months with just a slab and nothing happening because we are waiting for frames,” he said in the report.

Even though Mr Ellett is building twice as many homes this year compared to last year, he will make the same amount of money. He said that he is losing money on all the 60 homes his company is building due to unforeseeable material price increases that were not factored into customers’ contracts and is also having to hire fencing, skips and portable toilets for longer periods of time.

“It is hard to explain to people that during a building boom builders are going bust. I am a reasonably sized builder and will be able to ride this out but I would not be surprised to see some builders going bankrupt.”

Delays are unavoidable and needed to be factored into build times, Master Builders Association of Victoria Chief Executive Rebecca Casson said in the report.

“We urge our members to work closely with clients to discuss alternative time frames and we also strongly advise customers to plan for price increases,” Ms Casson said.

Builders are no longer being provided with estimated delivery dates of raw timber which is in particularly short supply due to suppliers not knowing when stock is arriving, while the cost of domestic framing timber has increased by 20 per cent, according to The Age.

Builder and owner of BCT Group in Seddon, Bevan Uren, said delays have blown out for key building materials, with builders having to wait 16 weeks for laminated veneer lumber, which is a high-strength engineered wood product used for structures.

As the owner of building and design company BCT Group, Mr Wren said he has switched from using timber in frames to steel to avoid cost blowouts and delays but said it was now becoming more difficult to source steel due to demand, along with other key building materials.

“What used to take two days now takes two weeks and what used to take two weeks now takes two months,” he said in the report.

The pandemic had spurred a boom in renovations because home owners were investing the money they previously spent on overseas holidays on improving their living conditions.

A record 146,000 new detached homes were set to built this year which is a 20 per cent increase on previous figures, Housing Industry Australia Chief Economist Tim Reardon said in the report.

Mr Reardon said this boom was due to the government’s Home Builder Scheme—which provides $25,000 grants for new home builds or significant renovations—low interest rates and a population shift to regional areas, with timber demands expected to level out in the next six months.

“Delivery times of four to 12 weeks are now fairly common. Builders need to manage that scheduling better than they have in the past because of the constraints on materials,” Mr Reardon said.