Peak of housing timber crunch has passed: HIA

Timber shortages have led to delays of up to three months in residential construction projects, industry sources say. Photo: Shutterstock
Timber shortages have led to delays of up to three months in residential construction projects, industry sources say. Photo: Shutterstock

The worst of Australia's timber shortage has already passed, with a dive in overseas timber prices, better planning from builders and new support from the federal government likely to lead to reduced timeframes on residential projects according to a housing industry economist.

Angela Lillicrap, an economist at the Housing Industry Association (HIA), said that while it would take some time for the supply chain to fully correct, a fall in timber prices overseas would eventually be felt in the domestic market.

"It's just going to be a matter of time until we've resolved this, so we're definitely past the peak of it. It's not going to get any worse, we've seen timber prices in the U.S. and Canada come off quite rapidly so it's only a matter of time before that extra timber supply that comes from there comes over here [to Australia]," she said.

Although Australian generally sourced "around 80 per cent" of its timber supplies domestically, the remaining 20 per cent is sourced from overseas, Ms Lillicrap said.

The boom in residential construction here during the COVID-19 pandemic had coincided with a surge in construction in major overseas markets like the U.S. and Canada, meaning overseas suppliers had been unable to meet this shortfall during the pandemic.

Homebuilding activity from the HomeBuilder grants - largely responsible for the huge surge in domestic demand for timber - was set to pass key construction milestones in coming months, further alleviating pressure on timber supplies.

"Our level of construction is going to ease when all the Homebuilder projects pass that timber [frame] stage as well," Ms Lillicrap said.

The timber shortage had led to blown-out timeframes for construction, with either builders or homeowners wearing the additional cost depending on the nature of the building contract.

"Talking to builders it's ranged, depending on the size of builder, from a week or two to up to 12 weeks delay," she said.

The Master Builders Association, another industry group, also recently pegged the timber-related delay to construction times at "up to three months".

Ms Lillicrap said that builders had adapted their ordering behaviour to match the changed timber supply situation, ordering materials weeks or months in advance rather than "the day before".

"[The impact of shortages] depends on the builder, what we've heard is some of the bigger builders have their own supply chains, so they are able to get preference from their own suppliers where as I guess some of the smaller builders don't have that," she said.

Some builders had also been resorting to using steel frames instead of timber, Ms Lillicrap said.

Federal government boost to help supply

The federal government this week committed $15 million to transport bushfire-affected timber from Kangaroo Island to mainland timber mills, heralded as a major step in solving the timber shortage.

According to the federal government, the timber moved from Kangaroo Island could be used to support the construction of up to 10,000 homes although it will take years for all of the timber to be transported off the island.

Ms Lillicrap said that the HIA was supportive of any measures to increase supply.

"I'm not entirely sure how much is going to come out of this [announcement] but any increase in supply is going to be beneficial for the industry," she said.

The Master Builders Association also welcomed the announcement.

"This comes at a crucial time for thousands of builders and tradies whose viability is threatened by a surge in the price of timber and chronic delays of up to three months to access the timber needed to construct new homes and renovations," CEO Denita Wawn said.

"Subsidising the transport of salvaged timber from plantations on bushfire ravaged Kangaroo Island to timber mills with immediate capacity in South Australia and other states is elegant in its practicality," she added.

This story How the great timber housing shortage has been reversed first appeared on Newcastle Herald.