Construction stalls

Shortage of supplies as renos and home builds surge

HOMEBUILDER is fuelling a “perfect storm” for Gold Coast builders who have been swamped with work and hit by long delays for increasingly costly materials.

The federal government scheme announced last year offers eligible consumers a $25,000 grant for contracts signed for new builds and renovations between June and December 2020, or $15,000 for contracts signed between January and March this year.

Spectrum Homes owner Tony Reeves said prices for materials had all surged on the back of HomeBuilder.

Timber is up 25 per cent, steel has risen 12.5 per cent, and brick prices had increased 10 per cent.

“The construction industry is out of control,” Mr Reeves said. “The government obviously brought in the incentive to stimulate the industry which is great, (but) no one would have predicted what it has created.

“Every day we are getting increases from different suppliers. Timber is the worst – there is just a lack of it. There is no supply and they are asking whatever they want for it.”

Mr Reeves said he had 20 projects on the go.

“Some jobs are sitting there for four to six weeks without a roof going on it,” he said.

He said the costs, currently borne by builders, would need to eventually be passed on to consumers.

“I feel you could see 8 to 12 per cent increases in home pricing in coming months so on average a $400,000 contract would increase by $40,000, Mr Reeves said. “In effect, the grant provided by the government will be spent on additional home costs.”

Master Builders Queensland regional manager Adam Profke said smaller builders were feeling the effects of the price increases more than the bigger players. “If you’re a smaller builder those prices could be 30 per cent because you don’t have the volume of work,” he said.

Mr Profke said there were a number of reasons for the price increases, including a timber shortage, delays in shipping materials from overseas, and the effect of HomeBuilder.

“We knew there was a shortage coming, however demand has grown exponentially over the last six or seven months,” he said.

“Overseas in China factories shut down for a period of time so we can’t get (the materials) and when we can get them they come at a premium price.”

He said builders who signed contracts today with fixed costs run the risk of bearing the brunt of price increases for materials in the future.

“It’s not just a Queensland or Gold Coast problem, these issues are found around the country,” Mr Profke said.

Condev Construction executive chairman Steve Marais said “the cost of steel has gone up by 15 per cent in the past two months. We have got orders for 750,000 tonnes of steel in our system and 15 per cent for us means a $300,000 to $400,000 loss”.

Mr Marais said he expected the “bull” phase of the market to last another two years.

“The reality is that products and trades are becoming more scarce and expensive,” he said. “Developers securing land now (for apartment towers) … their feasibility is under pressure already. How do you fix feasibility under pressure? You put up the sale price.”