The National Construction Boom

National Construction Boom Leads to Shortages and Delays

Australia’s construction boom over the last year has created shortages and delays, frustrating builders. Demand is outpacing supply, causing price increases for construction materials. Builders wait up to three months for basic materials, backing up the start and completion dates for scheduled projects. Engineered structural timber, also called laminated veneer lumber (LVL), is low in stock.

Even when they can secure the needed materials, they are at much higher prices. Frustrated customers are cancelling projects, causing a new source of headaches for builders as they try to keep this building boom from becoming a bust.

Why is construction booming?

A major player in this construction boom is COVID-19. The Australian government launched several grant schemes and initiatives, like HomeBuilder, to help push the economy toward post-COVID recovery. Encouraging consumers to move forward with building plans and renovations inadvertently worsened a timber shortage, creating a new headache for builders. Timber already was struggling to rebound after the devastating 2019-2020 bushfire season. Australia lost more than 10 hectares of land, which pushed timber production behind. Factor in the global pandemic – which saw plants close and reduce production during mitigation efforts – and timber has a long road toward recovery.

HomeBuilder is not the only driver behind the construction boom. Other COVID-19 government assistance programs focused on improving opportunities for tradies, boosting apprenticeships wage subsidies, and new bank loan guarantees that encouraged businesses to hire and invest in their communities.

Impact on builders and clients

The construction boom has been a blessing and a curse for contractors, building certifiers, and surveyors, who find themselves juggling high demand with low inventory. Some of the difficulties they face include:

• Rising material costs threaten to price them out of jobs. Timber skyrocketed to prices 400 per cent higher than they were one year ago. Concrete and steel also are in high demand, with prices reflecting 3 to 7 per cent increases across the board. Builders must raise their rates to offset the surges in cost for building materials for commercial and residential properties. Even though investors and private citizens have government assistance programs available to help fund new projects, they could choose to postpone until material costs decline again. Industry forecasters predict the higher prices will last through the third quarter of 2021 before beginning to regain some normalcy.
• Material shortages for timber and steel products like rebar are grinding progress to a halt. Even if they have clients willing to pay extra for required building materials, that is no guarantee the project can move forward.
• A stressed global supply chain is worsening building material shortages by slowing sourcing from previously reliable suppliers. Port congestion and difficulty securing shipping containers have slowed the import of even the most basic supplies. The bad news is the shipping container shortage driving price spikes is anticipated to last until early 2022.

Boom or bust for building certifiers?

Building certifiers and surveyors can take full advantage of this building boom by planning and prioritising jobs. Focusing on assessing and approving new building or renovations plans can keep building surveyors busy whilst supply shortages run their course. The surveying sector has experienced a skills shortage for several years, leaving them in high demand. This means they likely will remain busy despite shortages of building supplies and higher prices.

Improve flow with building certification software

Ensure the construction boom does not turn into a bust with building certification software. Visual Approvals building certification software helps building certifiers and surveyors process applications faster so they can grow their businesses and expand their customer bases. Reach out today to learn more.