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Building supply chain under pressure as home construction and renovating demand surges

ASSA | 2021-01-21 11:31:38

A home building boom and the coronavirus pandemic have blown out the time it takes to secure quality home finishes and some building materials.

Renovators and those building new homes are being warned to get design picks locked in early to avoid disappointment, with overseas lockdowns combined with shipping and supply-chain issues slowing down international deliveries of everything from tiles to taps.

Detached housing construction is rising; the number of new houses commenced rose 4 per cent in the September quarter, official figures released on Wednesday show.

Lending for new home building reached a record high in November, and the take up of the federal government’s HomeBuilder scheme smashed expectations, with more than 75,000 households applying for the grants.

Preparation will be key to keeping projects on schedule, Housing Industry Association (HIA) chief economist Tim Reardon said.

“The building industry is going to face a challenge,” Mr Reardon said. “Early this year there is going to be a significant surge in the number of detached homes being built and that will require builders to carefully plan and ensure they have an adequate supply of building and labour products to meet the growth.

“They’re [also] going to be competing for the same pool of workers,” he added, although workers from the slowing multi-unit sector would likely switch into home building and renovating.

Couple renovating house.
Renovators and builders need to make design decisions early, to avoid facing delays. Photo: iStock

With the bulk of building products manufactured in Australia, restricted supply was mostly limited to imported fit-out products, Mr Reardon said.

“For certain products there may be constraints,” Mr Reardon said. “Customers may not necessarily get the specified tile or tapware they want, but there will be other options available and it will not cause significant disruption.”

It will be an issue for home owners set on a particular option, who will need to make design decisions further in advance, said builder David Moses, managing director of Horizon, based in Sydney’s eastern suburbs.

Once ordered four to six weeks in advance, bathroom tiles are now being ordered up to four months ahead of schedule if supplied from overseas, Mr Moses said.

“We’ve tried to be even more organised in terms of ordering things well in advance and either storing it on-site or in a warehouse … and we’re encouraging our subcontractors to do the same,” Mr Moses said.

“[But] things break, people change their mind and we’ve been in situations where we need just one part and it’s four or six weeks away. Normally … you’d say ‘let’s fly it out and pay for freight’, but there are no planes.”

Buyers of renovated properties should look for quality homes and make sure corners haven't been cut.
Light fixtures, tiles and ovens shipped from overseas are among the finishes that builders are seeing long delays on. Photo: iStock

Orders for stone tiles, complicated electronics and sensors for smart homes, and other specialised products from Europe, ran the risk of lengthy delays, he said.

Others in the industry reported slow downs on features like door handles, light fittings, high-end appliances, and even shortages of some timber products – with supply impacted by last summer’s bushfires.

Most finishes were still available, just taking longer to arrive, said project manager Sarah Wood, director of The Middlewoman, based in Sydney’s inner west.

She said supply was tight, particularly for products from hard hit countries like Italy.

“It’s always coming, it’s just sitting on the dock,” Ms Wood said. “[The delays] just mean you have to be organised, you can’t do last minute things, as that’s when you have to try different styles or products rather than what you want.”

Mr Reardon expected the surge in renovation projects – already up 25 per cent – to increase further, as a result of changing housing preferences off the back of lockdowns and the rise of working from home, as well as people redirecting travel budgets to home upgrades. HomeBuilder had also been a key factor behind the rise, he added.

Hardware giant Bunnings has already seen strong demand for timber products in recent months, as Australians spend more time at home and more home owners look to build or renovate, according to general manager of merchandise Tracey Lefebure.

“Demand for some timber items sometimes exceeds supply at some stores and Trade Centres, however our suppliers are supporting us with fresh stock on a regular basis to meet demand.”

Overall though, Bunnings was not seeing major stock constraints with good availability of most products across the store network, Ms Lefebure said, adding there was the option to source from alternate suppliers where necessary.

Peter Langfelder, director of home building company Metricon, was sure there would be some pressure on trades for some builders in certain areas. However, he was confident the company’s supply chain would ensure there were no delay on Metricon home completions despite the increased demand.

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