Elsie Adamo
BUILDING supplies in the region are rapidly rising in price, impacting the industry and people in the area looking to build.
Common building supplies such as timber, laminated veneer lumber (LVL), steel, concrete and fuel have become more expensive in recent months, significantly impacting how builders plan their work.
Mount Gambier based builder Peter Cavanagh said the difference has been noticeable.
“Pretty much everything is going up, it all adds up quickly,” Mr Cavanagh said.
“There are problems with supply at the moment as well.”
Mr Cavanagh said his business’s contracts do allow for variations in price due to increased costs, but it is a balancing act keeping the owners happy.
“I am sick of doing variations at the moment, it is doing my head in,” he said.
“It is a bit hard going back to someone that has signed a contract for $400,000 and say ‘I have $40,000 worth of variations’.
“A lot of it is when you are halfway through the build as well.”
However, so far the increased costs do not seem to be having an impact on demand.
“Everyone is booked out until the end of next year,” Mr Cavanagh said.
“I have got people ringing me up every week.”
Clint Mitchell, construction manager at Empak Homes, said that the price of building is rising at yearly rates in only a quarter.
“Rising costs and supply issues are creating a big price difference to what it was a few months ago,” Mr Mitchell said.
“Each quarter the price of a house build has been going up three per cent which is quite unusual.
“Normally that price rise would be maybe over a year, so it is quite a jump.
“It is in the builder’s best interest to finish the house as quickly as they can, but it is difficult with the slow process of getting materials plus labour because the longer it takes the more it will cost.”
The business works on a fixed price building model, where they work to an original quote on the costs of the house and wear any excess.
Mr Mitchell said the price rises have caused them to hold off signing contracts.
“We have been quite wary on signing contracts because of those price rises,” he said.
“We work on a fixed-price contract, but we try and hold it off as long as we can because once we sign that fixed price, we have to wear any of those price rises.
“Because our lead times are so far out, we can drag it out a little bit longer than we normally would.
“We do not want to sign them up too quickly and then build the house in 12 months’ time because that whole period we will be hit with price rises.”
And prices look like they may keep going up.
A letter to customers from general manager of Banner Mitre 10 and Keith Timber Group, Jarrod Spearman, noted that world events had been having an impact on local supply prices.
In the letter, Mr Spearman said customers could notice a significant difference in quotes since September 2021.
“We have recently been informed of significant price rises in OS Brace [bracing board] and LVL ranging from 18 per cent to 30 per cent taking place from May 2022,” the letter stated.
“While we welcome the recent budget announcement temporarily reducing the fuel excise, the unprecedented scale of the increase [in fuel prices] has forced us to examine our delivery charges and, as a result, we will be implementing a fuel levy of 15 per cent for deliveries from April 2022.
“We believe the combination of conflict in Europe and the northern hemisphere summer will continue to drive price increases across building materials in the second half of 2022 and we urge you to factor this into your pricing models.”
