The building industry, reeling from material shortages, will have its main source of a special timber from Russia dry up after October, adding to chaos for builders and consumers during the biggest boom for new detached homes on record. Source: Sydney Morning Herald
Industry experts fear the “magic pudding era” of plentiful supply for home building has ended as Victorian plantations, which require decades to reach harvest, lack the resources to catch up with demand and international supplies become increasingly scarce.
The invasion of Ukraine has led international forestry groups to deem timber from Russia and Belarus “conflict timber”.
Australia will place tariffs of 35% on timber from the two nations after October, which allows some leeway for timber already in transit.
Russia accounts for low overall timber imports to Australia, but provides 60% of laminated veneer lumber, or LVL, which is used in housing frames.
“That hasn’t hit us yet,” Frame and Truss Manufacturers Association executive officer Kersten Gentle said. “There is timber still being delivered overseas that was ordered before.”
Tim Woods, of IndustryEdge, wrote in a report for the association that local softwood plantations would need to increase in size by 50% to meet local demand by 2050.
“This is the end of the magic pudding era for wood supply,” he told The Sunday Age. “The softwood plantation estate that supplies the wood has not grown in any meaningful way over the past three decades.”
The home-building industry is already facing four-month delays on average for new stand-alone homes, and the cost of materials has increased 15% in the past year – the biggest increase since 1980, according to Housing Industry Association economist Tom Devitt.
Home owners have seen low interest rates and pandemic stimulus such as the federal HomeBuilder grants drive up demand, while international supply-chain chaos and COVID-19 restrictions stifled timeframes.
Devitt said the end of the HomeBuilder grants and rising interest rates were yet to slow demand for new home sales.
“It’s incredible outside of periods of direct stimulus,” he said, anticipating that demand could stay elevated for 18 months. “We’re having the single biggest detached-home building boom on record.”
Material delays are putting pressure on consumers facing rising rent and mortgage payments.
The challenging environment led Australia’s biggest home builder, Metricon, to
detail a new financing deal with the Commonwealth Bank on Friday to increase its working capital facility while receiving $30 million from shareholders. The deal followed speculation about Metricon’s fi nancial woes, which the company had denied.
Victorian Forest Products Association chief executive Deb Kerr said tariffs on Russian and Belarusian timber would lead to price increases, but some Australian buyers were already slowing reliance on conflict timber.
She said Victoria was building 71% more detached houses annually than in 1990, but domestic timber supply from the state’s plantations has only increased by 7%.
“There’s static supply and increasing housing demand here,” Ms Kerr said. “The only place it can come from is imports, where you’ve got conflicts happening and global demand outstripping global supply for timber.”
Australia more than doubled its reliance on Russia for imported supply between 2020 and 2021.
Mr Woods said most of this was for specialist products common in modern houses, such as laminated veneer.
“The bans will have a significant impact in Australia,” he said, adding only a fraction of the LVL product wasn’t imported.
“There are major efforts under way in the domestic industry to increase local capacity, but that is not a short-term solution, obviously.”
