TIMBER prices have skyrocketed by 380% this year, as the global construction boom continues to strain materials supply.
According to the latest data from Grafa, after timber prices reached these record highs in May a critical lack of this essential material is expected to leave construction delayed and increasingly expensive.
“In uncovering what was behind lagging construction times, the analysis team at Grafa found that record high timber prices had caused a supply shortage that will plague the industry for the foreseeable future,” said Dan Petrie, analyst at Grafa.
Following the summer 2019/2020 bushfires, the country’s timber supply was drastically reduced, with 8.5 million hectares of forest being destroyed across NSW and Victoria.
“While timber prices have since fallen from a record high, supplies are unlikely to become cheaper any time soon with scarce imported inventories fetching top dollar,” said Petrie.
According to the Australian Department of Agriculture, Water and the Environment, replenishing these lost supplies will take decades.
The construction industry will be forced to wait on $1.6 billion of residential construction activity brought on by the grant, due to this lack of supply.
“This shortage is going to be felt the worst by young people who’ve received the HomeBuilder grant, and that’s going to have a flow-on effect to the economy as more and more projects are put on hold indefinitely,” added Petrie.
10% of the 99,000 households who applied for the HomeBuilder grant, have been unable to move forward with their plans, and could be forced to let go of their lease with no clear completion date.
Construction activity across the country declined in June, continuing its fall since March’s record high as growth rates slow down, with delays in supply deliveries, as well as increased freight pricing dragging down rates.
Meanwhile the current condition of the market, primarily low interest rates and incentives, will continue to add to demand in the sector.
“Because of affordability constraints and critical value thresholds to remain eligible for the grant, some households have been left with no choice but to put projects on hold indefinitely until the current shortage ends,” concluded Petrie.