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3 June, 2021

Timber Shortages Hammer Building

WITH a booming local and national home building sector, serious material shortages are starting to impact significantly on the cost and construction times for residential housing in Cairns.

By Peter McCullagh

5 Rivers Constructions, Cairns builder with more than 25 houses awaiting commencement.

Local builders are struggling with a lack of supply in timber framing as well as roof trusses. These shortages are leading to increased prices, placing the viability of some fixed price building contracts in doubt.

In February the price of laminate beams and pine framing went up 8.5 per cent with a further 15 per cent increase expected this month.

The shortage of timber is a direct result of the surge in demand for new homes off the bat of HomeBuilder grants, combined with record low interest rates and a shortage of timber as a direct result of the bushfires last season.

Cairns is experiencing a building boom of pre-GFC proportions. Southerners are also flocking to Cairns in record numbers, escaping the COVID lock-downs interstate, placing further strain upon the booming residential housing market.

Sharon Vella Regional Manager of Master Builders Queensland has concerns as the impact these shortages will have on the building industry in North Queensland.

“There’s a global shortage of timber. The cost of timber framing and laminated beams are nothing short of diabolical – and that’s hurting builders big and small right across the state, and the nation.

“For builders who have locked in a fixed-price contract with their customers, the cost increases are still coming through, leaving the builders to wear those costs.

“Unfortunately, this means some builders might go under. We’re not seeing that at the moment, but it may well happen.

“In the worst-case scenario, particularly for the smaller businesses who can’t cope with the price rises and delays, the owners terminate the contract, and there’s a run on the QBCC’s Home Warranty Insurance, leaving the builders facing financial ruin.

“The best they can hope for is using Extension of Time provisions in contracts for builders in fair and reasonable circumstances, which is something we’re currently working on with the State Government.

“These measures will also help ensure consumers who, through no fault of their own, are facing lengthy delays to have their homes completed, while the industry pleads for patience and understanding,” she said.

Some builders are reviewing the use of steel framing for their new builds, however the cost of steel is also on an-upward trend, creating similar price issues for builders.

Ram Singh, Director of local building company Five Rivers Construction is facing similar supply issues with his current contracts.

“Currently we have 16 houses under construction and a further 25 signed and yet to commence.

“We are losing business as a result of these shortages. We are upfront with our customers, advising them of the expected delays, and in some cases, they do not proceed with the contract.

“We have considered steel framing, however with the massive increases in steel prices, the price difference can up 30% more,” Mr Singh said.

Five Rivers Construction have been building in the Far North Queensland market for the past four years, with more than 55 houses completed.

“We are in the middle of a building boom, with 40 plus contracts and new builds underway. It’s a shame the shortages are slowing us down.

“The demand for construction continues to grow with constant enquiries from down south as well as investors wanting to enter the market.

“It’s a shame a supply shortage is impacting upon the industry at the moment.”

Cairns Regional Council reports that for the current financial year there has been 786 single dwellings approved for construction, compared to 355 over the same period in 2019/2020.

The building industry is worth more than $2.6B* to the Cairns economy and the industry supports more than 9000 direct jobs and supports an additional 17,500* local workers. * Source: National Institute of Economic and Industry Research (NIEIR) 2021.

Master Builders Queensland believes more need to be done to support this essential industry in Queensland.

“With thousands of contracts signed in response to the HomeBuilder grant, rising prices and trade and material shortages, the industry is facing a ‘profitless boom’.

“We need the state government to maximise taxpayer funds to build schools, hospitals, and other facilities to service our growing communities, particularly as interstate migration continues to prove Queensland as the destination of choice.

“We also need visibility on the pipeline of these works when the state budget is handed down next month.

“We want to see the current Best Practice Principles scrapped, which mean taxpayers are currently paying around 30 per cent more – the same in both metro and regional areas such as here in Cairns - to build public projects.

“While we support equitable housing, we don’t think it’s fair to make home ownership more difficult by saddling people with mandatory accessible housing standards being touted by the state government in the 2022 National Construction Code.

“Detangling red tape around this, as well as Minimum Financial Requirements, Project Trust Accounts and the proposed developer licensing regime, is vital to allowing the industry to get on with the job of leading the state economy as we continue on the road to a post-
COVID future.”

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