Building materials shortage crisis hits Cairns construction industry

Significant delays and soaring costs of building supplies are putting pressure on an industry already struggling with labour shortages as a housing boom piles on demand.

MATERIAL delays and soaring costs are choking the Far North’s building and construction industry, with the situation predicted to bring some businesses to their knees by 2022.

For Dynamic Timbers manager Nathan Smith, the shortage of supply, “has been out of control.”

Mr Smith said their three stores based at Cairns, Atherton and Innisfail are flat out.

“We have been at the point where we were 13 weeks from order to delivery but now we are back to eight,” he said. “From what we are seeing delays are rife throughout the whole industry and we are also hearing stories about a shortage of roofing iron and roofing screws.”

This comes as a recent Master Builders member survey confirmed the situation for builders and trade contractors is dire, with the fear some businesses will reach breaking point by next year.

Dynamic Timbers manager Nathan Smith said a shortage of materials has meant up to an eight week delay of trusses made at their Innisfail premises which are then sold at their Cairns, Innisfail and Atherton stores.

Mr Smith said the shortage means higher costs for everyone in the industry.

“It’s difficult for builders to quote work at the moment as we don’t know what our prices will be mid-2022,” he said.

“We have seen price rises 10 to 15 per cent every almost second month and over the last 18 months our costs have increased 75 per cent.”

The crisis is compounded as material costs are rising, adding thousands of dollars to the cost of work which is being worn by the builder.

Mystyle Homes managing director Grant Hartwig who is managing 38 dwellings across the Cairns region, said he feared the increasing cost of materials will force some builders out of business.

“Apart from price rises it’s affecting everyone’s cashflow as you cannot claim the next stage of your build if you cannot move from the base to the trusses,” he said.

“It affects your cash flow, the builder has to wear it so volume builders on very tight margins could be in trouble.

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“We are thanking our lucky start we stopped signing up new builds in November.”

Mr Hartwig said this has created a situation where, “the builders are not making money but the tradies are.”

“We had a renderer who upped his rates three times on us one afternoon,” he said.

“I’m always talking to suppliers about delivery dates.”

Builders are scrambling to complete a surge of work brought on by the HomeBuilder and Regional Home Building grants, record low interest rates and high interstate migration. The industry is struggling to keep pace against the backdrop of supply delays and price hikes.

Master Builders’ June survey revealed lead times across key building materials has blown out, with 100 per cent of respondents now facing delays on timber.

ASSOCIATION WARNING OF ‘PERFECT STORM’ FOR TRADE

MASTER Builders’ Association Queensland deputy chief executive Paul Bidwell said the cost of timber, frames and trusses had increased some 75 per cent since the start of the year and could increase another 20-25 per cent from November.

Mr Bidwell said there was “no way out” for builders who were having to absorb increasing costs out of their own pockets, costs that would eventually also flow through to homeowners.

He said the crisis was affecting builders through Far North Queensland as well as the rest of the country.

“There is no way out of it I am afraid, this is a perfect storm,” he said.

Master Builders Deputy CEO Paul Bidwell. Picture: Tertius Pickard

“I am concerned that by the end of the year, perhaps early 2022, that some builders will go to the wall as they have signed contracts to build homes and then found that material costs have increased significantly.

“Our legal team is getting calls from builders every day and we think this could send some builders to the wall.”

Mr Bidwell said even the bigger builders are starting to feel the impact.

He said while a business with a greater volume of builds may be able to get their materials ahead of a smaller builder due to their larger transactions with the supplier, it does not offer any delivery guarantees.

“Costs are going up, we are seeing price lists all going up, no pattern other than prices heading north,” he said.

“It’s not the builders or the building community’s fault.”

Originally published as Building materials shortage crisis hits Cairns construction industry