Increased demand for construction materials and international shipping restraints as a result of the global pandemic have resulted in a shortage of essential building supplies across Australia. The deficit has caused steep price increases, delays in construction timelines and uncertainty around what this means for the future of our property market. Freight delays and strained supply chains around the world have triggered the shortage, while growing demand has been boosted by Australian’s taking advantage of low interest rates and Government stimulus for homeowners.
The Federal Government implemented the HomeBuilder scheme in June 2020, encouraging Aussies to build new homes or substantially renovate their existing property by offering a $25,000 grant. More than 100,000 Australians have lodged applications for the stimulus package, in which it stipulates that construction must begin within six months of the contract date. Applicants are now left wondering if the delays in construction due to supply issues will affect their eligibility, leading to calls for the Government to review the program to accommodate current conditions.
Timber, structural steel and concrete are among the key building materials that have already seen price increases of between 10-15% in the first quarter of 2021. Australia historically sources approximately 80% of its’ timber internally, but after the 2019/2020 bushfires left 130,000 hectares of plantations destroyed, our supply of locally sourced timber has been severely impacted. Builders and tradespeople already stretched thin to keep up with demand will be further delayed by the lack of available materials, pushing back completion dates in both private and commercial construction sectors.
Low interest rates and incentives to purchase have seen Brisbane real estate prices surge post-COVID, with prospective buyers outnumbering properties available for purchase. Limited access to building materials will not only affect the construction of new homes, but also delay the completion of residential apartment buildings across the City. The desirability to secure a property prior to inevitable building cost increases will further heighten competition in the Brisbane property market, putting pressure on already escalating prices across our River City.