Price pressures intensify in construction

He pointed out that the Treasury budget projected a wage hike of just 2¼ percent at the end of 2023 – lower than NAB’s own forecast of around 2¾ percent – as evidence the Treasury did not believe inflation would increase sharply, a point of view He shared.

“At the end of 2023, it may well be that the RBA will send out messages that it will be moving soon,” Oster said. “I think what’s probably more likely is that when they move out, they’ll move pretty quickly – but nothing until 2024.”

While smaller builders have already felt the blow of higher costs, including supplier CSR’s 4% price increase last month on its Gyprock plasterboard products, the country’s biggest players say the shortages local communities and increased global demand for certain materials, especially wood, will also affect them. .

“We are certainly right at the moment,” said Rhett Simonds, managing director of the ASX-listed Simonds group on Friday. “But we see a problem with the prices. In the next six to 12 months, we’ll see that. “

It won’t even be that long, says Metricon Homes, the nation’s largest home builder.

“I think [it’ll be] a little earlier than that, ”said Peter Temopoulos, managing director of privately-held Metricon for construction and operations in Victoria.

“Maybe three to six months, rather than six to twelve months. Probably in the middle of the year we will start to experience price pressure. “

Brisbane-based Pedal Group, which includes the 99 Bikes chain, faces higher prices for parts and bikes. Like many bicycle retailers facing growing demand and slower freight lines since the outbreak of COVID-19, the company is trying to manage higher raw material costs and tensions between supply and demand. .

That has yet to lead to higher prices for buyers, said Pedal Group general manager Matt Turner. In fact, for bikes costing less than $ 1,500, the price was going down with 99 bikes being on sale because there was too much stock.

“Over $ 1,500 in bikes, availability is low, so there are a lot less discounts,” Mr. Turner said. AFR weekend. “The prices are still the same, but consumers won’t get a lot of discount offers.”

But in the future, some prices could increase by as much as 10%, he said.

Supply shortages are also causing long waits for new car buyers in Australia as demand picks up due to low interest rates and an improving economy.

James Voortman, chief executive of the Australian Automotive Dealers Association, which oversees the interests of 3,500 car dealerships, said discounts and promotions in new car sales were virtually non-existent.

Dealers who no longer need to change inventory have stopped offering discounts. Prices for recent models of used vehicles have jumped about 35 percent on strong demand, as households look to add an additional vehicle because they fear using public transportation.

“We are not seeing any of the reductions that would normally occur,” Voortman said.

CSR chief executive Julie Coates described the increase in gyprock prices last month as a ‘catch-up’ hike after no price hikes occurred amid the uncertainty of the early stages of the pandemic . The company also operates the PGH bricks business and the Monier tiles business.

And while large builders always expect higher costs, for many small builders they have already started.

“We’re probably paying 10 percent more for brickyards right now compared to six months ago,” Robert Lynch, executive chairman of ASX-listed Tamawood, which builds homes in Queensland under the Dixon Homes brand.

And the bigger builders, who had anticipated and prepared for higher costs for certain items, had also been surprised by shortages that they did not expect in items such as garage doors and waffle pods – the polystyrene blocks used as vacuum fillers in concrete slabs.

“The waffle pods are made in Australia, but the raw material comes from overseas,” Mr. Simonds said. “The ability to get him into the country has been a big problem. We weren’t expecting [a shortage of] garage doors. It surprised us.

Mr. Temopoulos was frank when asked to name the three materials most likely to increase their price.

“It’s wood number 1, number 2 and number 3,” he said. “There is both a shortage and pressure on timber prices. The biggest problem is the supply. We really haven’t seen the price pressure go up. “

He was reluctant to say when the higher costs would be passed on to consumers.

“The risk isn’t with the client, it’s on us,” Mr. Temopoulos said. “Will there be [retail] price increases? We’re going to have to wait and see … before we can make a call.


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Lillie Berry

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