Australia’s home building industry has seen a shortage of timber due to high demand, reduced domestic supply and a decline in imported pine. The import declines are as a result of record prices in the USA & Europe.

The surge in detached housing and renovation markets has caused drastic supply shortages, leaving builders facing delays to their projects. The surge has a dramatic effect on price which has risen by up to 40% in some states.

HIA’s Chief Economist Tim Reardon says demand for timber is 20 per cent higher than it’s ever been – and that surge in demand is occurring right around the world.

“The cause of the problem is simply the speed at which demand for detached homebuilding took off, and that this occurred in Australia at the same time it occurred in the rest of the world,” he says. “Roughly 20 per cent of the timber we consume domestically is imported, and because that demand we’re seeing domestically is replicated in the global market, the housing market is also surging.”

HomeBuilder applications closed in April, so builders should soon see the end of the surge from government stimulus, but Reardon says there are other factors driving demand, including consumer preference change and record-low interest rates.

“People are moving away from apartments to lower-density housing, and people working from home are looking for additional living spaces,” he says. “We’re also seeing a shift out of metro areas to regional areas, which is partly an acceleration of sea changes and tree changes.”

“Interest rates being at record lows are moving not just the first-home buyers market but also owner-occupiers, and now that we have house price growth, we’re starting to see investors return to the market.”

Dane Cartwright, who runs construction business Projection Build, says he was conscious the timber shortage was looming, so he and his team adapted quickly to keep work flowing.

“It’s had a direct impact on our procurement and lead times, certainly for wall frames and trusses,” he says. “One of the ways we’re mitigating the shortage, or the extended lead times, is we’ve substituted frame and truss supply and gone back to conventional timber framing methods, particularly cutting frames and pitching roofs on site. Though the downside of this is the impact of extended labour associated with completing these tasks on site.”

While material shortage is of most concern, Cartwright says the number of homes built this year may be restricted by two other factors – labour and land.

“We have renovations at a record high, so the labour market is very tight at present,” Reardon adds. “The other factor is the availability of blocks of land. Demand slipped in the middle of last year and has taken off quite quickly.”

Despite these harsh realities, Reardon assures builders that these constraints will pass with time, and that the market will grow to respond. “Over the course of this year, we will see domestic production increase, and the importation of timber will rise to meet demand,” he says.

Local retailers and their suppliers are also taking collaborative steps to provide support and relieve unnecessary pressures. Mitre 10 has issued an open letter reassuring trade customers that it is focused on working closely with timber suppliers to mitigate impacts as best as possible.

“We are committed to dealing with all loyal customers (big and small) through the challenges. Be assured that … the Independent Hardware Group and Mitre 10 management team are working daily with all timber suppliers to source product – at a fair price – for our customers,” it reads.

To help fellow builders, Cartwright recommends using quoting and project management software to help determine the materials required to complete projects, as well as “processing those material orders with your material suppliers as early as possible”.

“There’s an opportunity for young professionals to expand their businesses during this time, and to do that, you need to make sure you’ve got the tools in place to manage that growth,” he says.