Construction and renovation boom puts pressure on supply of building materials and trades

Soaring demand for home renovations is blowing out the time and cost involved in upgrading homes, with Sydneysiders warned to expect delays on both construction materials and trades amid a residential building boom.

A perfect storm of government incentives, low-interest rates, record savings, combined with Australians spending more time at home, has seen demand for upgrades soar.

Renovation activity is at an all-time high and likely to remain elevated for years to come, said Angela Lillicrap, an economist at the Housing Industry Association. The HIA expects $14.3 billion of renovation activity to be carried out in NSW this financial year, up from 12.6 billion last year.

“This level of activity is not likely to be seen again for many years, if not decades,” Ms Lillicrap said.

“The key challenge for the industry has shifted from a slump in demand this time last year to having sufficient materials, labour and land to satisfy this demand.”

The spike in activity has put pressure on the supply of building materials, particularly timber. With local supply already hit by the 2019 bushfires, delays to international supply initially caused by lockdown have been exacerbated by the global shortage of shipping containers and similar spikes in construction activity in countries like the US.

Bunnings’ merchandise general manager Toby Watson said unprecedented demand for structural timber products was creating a challenge for the entire industry and noted the hardware giant was working closely with suppliers and trade customers to forecast and plan in order to manage increased demand.

Another building supply store in Sydney has already sold timber not due to arrive until September, with another store reporting bathtubs and vanities were selling out quicker than they could get them in due to shipping delays and strong demand.

Upsizers Stephanie and Daniel Ferrara were among those rushing to renovate when international travel was taken off the cards, deciding to upgrade to an Ashbury house and renovate ahead of the arrival of their first child.

Flexibility and organisation were key for the pair, who carried out a $40,000 cosmetic renovation. They engaged a builder before they had even purchased their home in March.

The Ferrara’s avoided major delays but had tradies let them down because they couldn’t keep up with demand, with painters particularly tricky to lock in, and found pricing was less competitive due to strong demand.

They also had to change some fixtures and finishes – everything from power outlets to outdoor lights and a mailbox – due to shortages that wouldn’t see some items become available until August.

“Last time [we renovated 18 months ago], I wasn’t even as organised, and everything ran a lot smoother,” she said. “Most trades usually pretty keen to get started within a couple of weeks, this time around everyone like we can come in a month or so.”

Russ Stephens, co-founder of The Association of Professional Builders, said increasing supply and labour costs — bought about by shortages and increased demand — were forcing long delays and leaving builders out-of-pocket.

“When supplies are low, charges inevitably go up, but not everyone feels the higher price tags are reasonable.

“As a result, costs are exceeding budgets by thousands of dollars. Meanwhile, a lack of availability is causing huge delays, meaning builders are struggling to stay on schedule.

Builders both big and small were being affected, with Mr Stephens noting there had been instances in which larger builders with 150 to 200 slabs of concrete on the ground, couldn’t start framing due to the shortage of timber supply.

For trades, cabinet makers and roofers were increasingly hard to get a hold of, he said.

“Builders are getting gazumped, they might have a roofer booked in and then the morning of the job they say something else has come up… because they’re getting more money to go elsewhere, that’s what’s starting to happen.”