’Perfect storm’: Renovators face biggest supply price hike in 20 years

Tradies and wholesalers are paying hundreds more for building materials amid a global tug of war, and mum and dad renovators will bear the brunt.

Mum and dads looking to renovate – or even fix the front fence – face a “perfect storm” of rising costs as a global tug of war for building supplies meets a labour shortage.

The latest figures from the Australian Bureau of Statistics show in the year to December 2021 reinforcing steel prices have jumped by a massive 43.1 per cent, while timber has soared by 39.7 per cent and plastic pipes by 24.7 per cent.

It means wholesalers and tradies are paying hundreds of dollars more for materials than they were a just a year ago – with the end cost eventually passed on to customers.

Dennis Jones of ACP Pipes says prices have gone through the roof during Covid. Picture: Tim Hunter

Tim Reardon, the chief economist of the Housing Industry Association, said material cost increases were the “largest in 20 years” which would lead to longer waits for work to be completed and higher home construction costs.

“We are seeing a boom in renovations at the moment and a shortage in skilled trades, (it means) we’ll see longer lead time before work begins,” he said.

“It’s certainly leading to an increase cost in house and land packages and renovations. The increase in cost and materials will be felt by the end consumer, there’s no other way of putting it.”

Master Builders Association executive director Brian Seidler said the closure of borders had hurt both the supply of workers and imported materials.

“We’ve had bushfires, floods, and unprecedented calls for construction, but our two issues is the spiralling costs of materials and the cost of labour going up,” he said.

“We’ve got so much work out there and the international borders have been closed.

“A lot of these products are obviously imported, so the impact on the supply chain lies with the countries where they come … it’s a perfect storm.”

For businesses stuck in the middle, they’re left in the uncomfortable position of trying to absorb costs while making a profit.

Dennis Jones, the managing director of pipe supply company Australian Custom Pipes at Chipping Norton, said raw materials have “gone through the roof” in the last year – citing import and freight costs, the price of oil used to make pipes, and the weak Aussie dollar.

“It’s the highest our raw materials have been in the last 20 years,” he said.

“Unfortunately we can’t absorb the cost – it gets passed down.”

Chris Trimmer, the director of bricklaying business CT Masonry, said shut borders had seen many brickies leave the country or unable to enter.

“Labour’s gone up a mile because we’re not getting anyone in to coronavirus, because the backpackers and all sorts of workers we usually get from England and Ireland haven’t been able to get in,” he said.

Evan Angelopoulos, general manager at Danias Timber, has been hit by supply shortages. Picture: Justin Lloyd

Those in the timber industry – where costs have soared by almost 40 per cent in the last year – are also braced for a “tough” few months, according to Evan Angelopoulos, the general manager of Danias Timber at Marrickville.

Mr Angelopoulos said they while it used to take two or three days to order certain products in, it was now taking eight to ten weeks.

The story is similar in steel, where costs have jumped by more than 43 per cent in the last year.

“For the smaller fry, middle-guy like us, we have to put up with our margin and prices to cover,” Carlos Ramiraz, an estimator at Mascot Steel, told The Telegraph.

“Then we’ve got to pass that on to our customers and clients.

“It’s the truth, it’s fact.”