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What is this construction boom and how will it affect my new home build?

Record level demand for building materials such as timber and steel has seen the residential building industry struggling to meet client expectations with deadlines and pricing. 

Since COVID-19, demand for building materials has increased with particularly high levels of new housing and renovation projects. This has been due to worldwide government stimulus within the construction industry such as the HomeBuilder grant in Australia.

Dwelling approvals for houses are at a record high which puts additional pressure on construction costs and availability of resources.

Why is it so hard to source building materials?

The shortage of building materials is due to several reasons. In particular, timber shortages are due to the compound effects of the bushfires in December 2019. 

Up to 40% of timber stock in New South Wales was lost in the Black Summer Bushfires. 

In the past, timber has been sourced from overseas. Currently, timber that is usually imported into Australia is being taken up by other countries due to the pandemic and also industrial wharf disputes.

This reduction in imports has had a huge impact on our supply of timber.

Steel is another important structural component of new homes and one that is also experiencing limited supplies along with price increases. 

Iron ores are rocks and minerals from which metallic iron is extracted and used to make steel. The price of iron ore is seeing a continuous upward trend which is the main driving force behind the price increases in steel. 

As we rely on local sources for our steel, supply and demand, along with iron ore pricing, is creating a very volatile market. 

So how will these external pressures impact my build?

If you have not signed a building contract, you will find there will be a significant price increase from your initial estimate to your final contract price. 

Builders are receiving emails daily from their suppliers advising them of price increases.

Builders are unable to absorb these costs themselves and must pass on the increase in price to the owner.

You will also find that your builder may indicate that your home will take longer to build. This is due to the time it will take to source all of the required materials and labour to build your home. 

Unfortunately, these factors are outside of the builder’s control. Sometimes if these delays are unforeseen and a contract has been signed, an extension of time to the build will be required.

Professional builders will find this current climate very frustrating. Your builder will be doing everything they can to ensure that your build progresses smoothly and with limited delays.

Time delays ultimately impact the builder’s hip pocket, it is in their best interests too to complete your home as efficiently as possible.

Having patience with your builder and an understanding of these extra challenges is important to ensure a continued enjoyable building experience.

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