Renovation and building chaos coming with price hikes and delays 

A reno-cession is looming with small renovation jobs already down while larger renovations and residential building face unforeseen price hikes and time blowouts.

A cocktail of chaos from lockdowns, labour shortages and a global shipping crisis means those planning renovations – including those taking advantage of Homebuilder grants – are likely to face project delays or price hikes for everything from tiles to hardware to windows, timber and steel.

National Tiles CEO Campbell Stott says some Australians are facing four to six-month waits to get a tiler to install a splashback, floors or bathroom, due to lockdown-induced labour problems.

Serviceseeking.com.au – an online trades marketplace – says total jobs in their renovation market are down 12 per cent nationally in July and August this year, compared to the same time last year.

While big building and renovation jobs worth more than $10,000 and measured by the Australian Bureau of Statistics are up 24.5 per cent in the year to June 2021, smaller jobs – especially those in locked down NSW – are plummeting thanks to lockdowns and materials shortages.

Serviceseeking.com.au CEO Oliver Pennington said the market is in turmoil, with July and August 2021 figures down compared to the same time in 2020, including electrical jobs down 34 per cent, handyman jobs down 35 per cent, plumbing down 30 per cent, carpentry down 26 per cent and general building down 29 per cent.

“The market isn’t good – it’s poor,” Mr Pennington said. “Businesses have stopped quoting because they physically cannot attend site inspections or take on new clients.”

Smaller builders and contractors may be booked out while others may be sitting things out as they collect business grants, knowing a glut of work is waiting when lockdowns ease.

Total jobs in locked down states like NSW and ACT are down by more than 30 per cent in July and August. Jobs in WA and Queensland are relatively stable, as is Victoria, which is up by 5 per cent after last year’s extended lockdowns.

“Business activity is way down. Quotes per job are 28 per cent lower this year than last,” Mr Pennington said.

Economists like Bis Oxford’s Maree Kilroy are revising up cost impacts and aren’t willing to say how high building and renovation costs could rise due to the upheavals.

“This is one of the biggest concerns in the industry right now,” she said. “Activity that’s already on builders’ books will be impacted.”

Builders Collective of Australia chief Phil Dwyer said he has heard large builders are already cancelling contracts as trade shortages and price rises make it unviable to proceed when old prices are locked into contracts.

“People are waiting longer than four months to get a tiler. But it’s also door hardware – there simply isn’t any available. Without taps or without door hardware, you can’t get a completion certificate,” Mr Dwyer said.

Tilers, carpenters and glaziers are trades in short supply, and small builders won’t be able to deal with the timing delays or materials price rises, Mr Dwyer said, predicting there would likely be a rise in builder bankruptcies in 2022.

Brickworks CEO Lindsay Partridge, who briefly closed down two brick kilns in last year’s lockdowns, said brick production had slowed to about two-thirds of its normal rate in NSW, the worst-affected state.

“Things are restricted because you can only get so many trades on-site at any one time – there is limited demand right now,” he said.

A global shipping crisis also means Australia is missing out on supplies of imported building materials – everything from timber to flooring to windows and hardware – as suppliers send containers to the more lucrative European and American markets.

Goldenhome – China’s third-largest cabinet maker who now has an Australian factory to supply kitchen, laundry and wardrobe cabinets locally – has warned shipping prices are skyrocketing, and the problem will result in large price increases for imported renovation materials.

“At the beginning of the year it cost around $2500 to ship a container from China to Australia, now it’s four times that and the projections are that it will be between $18,000 and $19,000 before Christmas,” Goldenhome’s national sales and marketing manager Vasee Nesiah said.

“Our shipping agents say what used to take five minutes to book a container now takes two hours to get it confirmed and on a ship,” said National Tiles CEO Campbell Stott. “Inflation is coming.”

The Shanghai Containerized Freight Index shows the dramatic shipping cost hikes caused by a shortage of shipping containers and COVID-19-related labour issues in ports.

This will result in large price hikes of previously affordable building materials imported into Australia, from timber to tiles to capping to cabinetry and taps.

“It’s the small guys who will hurt the most out of this,” Mr Dwyer said. “Home owners get frustrated, too.”

Master Builders Australia CEO Denita Wawn said there was a perfect storm of factors leading to delays and cost issues.

“It’s in everyone’s best interests if the issues are worked through co-operatively and patiently by clients with their builders,” she said, recommending that home owners and renovators talk to builders about potential issues in advance of them becoming a problem.