A SURGE in demand and worker shortages have prompted building material prices to jump by more than a third, in a major blow to the industry as it tries to recover from the impact of the pandemic.
Dahlsens Building Supplies manager Colby Brown attributed the spike to a combination of factors, including 50 per cent more homes being under construction than before the pandemic’s start, a growing shortage of workers and extended building timeframes.
Timber prices had recently shot up by 39 per cent, and steel is up 37 per cent.
“In Australia, we only grow so much pine, so we have to balance that out with timber from Europe and North America, but of course, everything has been shut down” Mr Brown said.
“Shipping has gone through the roof, and then you’ve got places like the Baltic forests where a significant amount of timber comes from, and they have all been locked up.
“Nobody has been able to pick up scrap metal in Europe, which is used to turn into the wire we use in many of our metal products, including wire mesh.”
This is a significant issue for builders and homeowners alike, with most entering fixed-rate contracts.
These contracts don’t allow for fluctuations in material prices, which can hurt a builder’s bottom line.
This increases the risk of a building company going into liquidation or administration and leaving homeowners looking for a new company who are likely to charge much more because of raised costs to protect themselves.
Thankfully in the Swan Hill region, this doesn’t appear to be an issue as of yet, according to Mr Brown.
But he highlighted how stretched and tired the industry is.
“Most builders around here have a good couple years in front of them work-wise and were finally in the stage in the industry here where we’ve got two new massive land banks opening up”, he said.
“Areas like Lake Boga have really thrived, but the best thing for this industry, to be honest, is if we just had two weeks off because we are absolutely knackered and like everyone, we can’t get any workers.”
Unfortunately, prices are only expected to increase “there seems to be another round of increases going through over August and September and then it feels like it’s starting to stabilise,” Mr Brown said.
“I had a concreter’s mesh decrease the other day, which tells me it’s beginning to stabilise.”
