Home builders

Why delays and price hikes plague home builders

In 2019, Hayley Locke and her husband Jayden began building their forever home in Warrnambool, on the southwest coast of Victoria.

Ms Locke never imagined that more than two years later they would still be living in a tiny three-bedroom rental with three children during the foreclosure, waiting for their dream home to be completed.

The Lockes are among more than 100,000 homeowners reeling from long delays and record prices as Australia suffers its worst building material shortage in more than 40 years.

Ms Locke said the past nine months had been “a huge struggle”.

“I teach two kids at home, with a preschooler at home, while trying to work from home in a house that was not big enough for us to begin with,” she said. declared.

“With supply issues, at this point we don’t see ourselves completing construction this year.”

The Lockes have spent months on a waiting list for the timber frame after their delivery date was pushed back three times.

Window frames imported from Europe cost almost double their original price.

Pandemic trade bottlenecks and a global construction boom have left the Lockes going over budget and months behind schedule.

Industry executives blamed “a perfect storm” for soaring prices and a shortage of materials.

The effect of the pandemic on international supply chains and a global shortage of shipping containers has made importing materials extremely slow and expensive.

The Black Summer bushfires also wiped out 3% of the timber in New South Wales plantations.

On top of that, Australians have started building a record number of homes in 2021.

Housing Industry Association chief economist Tim Reardon said restrictions on coronaviruses and Federal Government HomeBuilder grants have contributed to an increase in the number of new homes under construction.

“Globally, we have seen a shift towards low density housing,” said Reardon.

“Work-from-home arrangements, moves to regional areas, sea changes, tree changes, retirees, all had an impact. “

This coincided with the Morrison government’s HomeBuilder program, which gave eligible home builders up to $ 25,000 and received more than 121,000 applications.

Since 2004, an average of 108,000 homes have started to be built in Australia each year, peaking at 119,000 in 2018, according to figures from the HIA. For 2021, that figure will be over 143,000, up 20% from 2018 and 32% from the 17-year average.

Record demand led to a shortage of materials and crafts, causing massive delays and price increases.

“Typically, a house would be completed in seven to nine months,” Mr. Reardon said.

“That number is getting much closer to 12 months at the moment.”

The costs of building materials also saw their biggest quarterly increase since the 2008 global financial crisis, according to the Australian Bureau of Statistics.

Despite an increase in domestic production, lumber recorded the largest price increase (6.6 percent), followed closely by plumbing, steel and electrical products.

An injection of $ 15 million from the federal government is expected to provide some relief from lumber prices and delays in the months to come.

Yet some builders and homeowners are still paying far more for materials than official data might indicate.

First-time homeowners Eloise Hill and Jacob Dobson saw construction set back more than two months due to rising prices.

In March, the young couple signed a contract with a small family builder to build their home in Doreen, north Melbourne, so the HomeBuilder grant deadline is only a few hours.

In early September, as construction was about to begin, their supplier informed Ms. Hill that the lumber had arrived.

But when the rain delayed the pouring of their concrete slab for a few days, the lumber was sold to a bigger builder at a higher price, which delayed their construction for 10 weeks.

“It’s just about the money per minute,” Ms. Hill said.

“It’s going to be ten more weeks that we have to pay rent. That’s six, seven thousand more dollars that could pay off our own mortgage.”

This is not just a problem for home buyers.

Charles Crook, director of the small Victorian construction company EngDev, said he had stopped offering new jobs due to the shortage of materials.

“You don’t know whether or not you can get the supply, and the customer doesn’t want to use you anyway because you’re overpriced. worth costing anything, ”Mr. Crook said.

“This is all a real puzzle.”

Mr. Crook turned to steel and structural insulation panels instead of wood frames to minimize costs and delays. But even they are feeling the pinch in supply as more and more manufacturers do the same.

HIA’s Mr Reardon said more Australian homes will be built from steel frames this year than ever before.

Steel frames are made in Australia, which means they are less vulnerable to international supply chain disruptions, but supplies of frames would still be “well below the volume needed to meet demand,” he said. he declared.

Still, there is hope.

Mr Reardon said that as the number of new construction returns to pre-pandemic levels and international supply fills the market, prices should return to normal – otherwise there could be an increase in investment. in Australian timber plantations.

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