Australia is seeing a housing boom, but builders are struggling to get the timber to make them

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Andrew Clements wishes his truss business could pump out more trusses to keep up with Australia’s insatiable appetite for building supplies, but he simply cannot get enough timber due to a “perfect storm” buffeting the construction industry.

AAA Advanced Truss’s Dandenong South base is running at just half its normal production capacity.

That’s despite a record number of new house starts in Victoria, with the Housing Industry Association recording 11,730 in the March quarter.

“We’ve had to turn a lot of work away because we can’t physically do it,” the chief executive said.

“It’s a perfect storm.”

Mr Clements’ business is far from unique.

Up and down the building supply chain, there are major delays and soaring costs due to a global timber shortage.

More homes than ever before are being built in Australia, spurred on by the Morrison government’s HomeBuilder program.

It is adding thousands of dollars to the cost of work, and it is often worn by the builder.

There are warnings the sector has not even reached peak demand yet.

Across the country, new home builds and renovations are taking longer due to a scarcity of timber.

Global competition for timber is driving up the cost

But Australia has never produced more timber.

Experts say there are a few reasons behind the timber shortage.

The HomeBuilder program from the Morrison government proved more popular than anticipated.

And because many other countries have used construction as stimulus, there is global competition for materials.

Builders are reporting bigger lead times for projects, with the wait for supplies blowing out to two months.

In an industry built on continuity during construction it’s a nightmare, builder Chris Eckersley said.

The current renovation he’s working on had a truss order cancelled because they were deemed too small a client.

“You are in a bind, you are almost willing to pay whatever to get the product,” he said.

It’s not just costs that are problem.

“In small domestic renovations, everything is in sequence, and you need that continuity of different other trades coming. Timing is a great thing, so to have a 6-8 week delay sets everyone back.”

Normally, one fifth of construction timber is imported.

In the US, the spot price for timber soared by 400 per cent. As a result, international traders were sending all their material to the United States.

Shipping costs are also through the roof and there have been delays due to the Suez Canal blockage.

Tim Reardon, chief economist with the Housing Industry Association, said commencement of new houses in the past 12 months was 20 per cent higher than ever before.

“We are six months into a 12-month problem, we may not be at the worst of the cycle yet,” Mr Reardon said.

And while domestic timber production is up 17 per cent, it has not been able to keep up with demand.

A HIA report says on that trend, Victoria has exceeded 40,000 new starts in a year for the first time.

“This record is likely to remain for many years,” the report states.

Rise in builder insolvencies sparks industry concern

The Master Builders Association of Victoria Rebecca Casson said the increased cost of building was being absorbed by builders, sending many of them broke.

“Master Builders Victoria is concerned about builders who have entered contracts and cannot absorb ever-increasing costs which, by law, cannot be passed onto consumers.”

The MBA said in the first four months of 2021, there were 145 building and construction insolvencies in Victoria — up 34.3 per cent on the same time last year.

Housing Minister Michael Sukkar said the federal government was looking at ways to alleviate the supply squeeze on builders.

“Some other sawmills that are almost exhausting their supply of timber and so they have got the capacity to do it, if there’s ways in which we can facilitate or help them get that supply, then they’ll be able to continue feeding into the market,” Housing Minister Michael Sukkar said last week.

By state political reporter Richard Willingham (Original ABC Article)