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Builders and suppliers across Queensland are reporting that the housing industry is experiencing supply issues with many building materials and trades. This is having an impact on the progress of building works as well as causing an increase in the cost of some materials and trades.
A number of factors have come together to create a “perfect storm”.
- A sudden surge in demand created by the HomeBuilder grant, a spike in interstate migration, relaxed mortgage lending criteria and the government’s early access to superannuation access scheme, all in an environment of continued low interest rates
- Ongoing natural disaster insurance repair work, such as the hailstorms in Brisbane and Rockhampton in 2020, which continue to monopolise many trade contractors
- A wet summer, especially in the north of the state, is reducing the number of days on site, leading to a backlog work, and
- Imported materials are still being delayed by COVID supply chain disruptions.
The extent of the delays and cost increases varies depending on the contractor, their suppliers and their location, but it is a very real problem across the industry.
Master Builders has surveyed members on the extent of the problem and found that the problem has reached critical levels.
Some examples of the price hikes and delays that are being reported include:
- 10-18% increase in timber frames
- 15 week lead time on frame and truss deliveries
- Plumbing hardware – three price increases over 3 months (8%, 9% and 10%)
- Shortage of timber whiteboard for cabinet carcasses
- Delays in window supply requiring additional certifier site visits
- Roofing costs doubling and delays at best of 1-2 weeks
- 30% increase for blocklayers
- 12.5% increase for steel mesh
- 7% increase for hot water systems.
How to manage delays and shortages
The reality is that cost increases and delays are unavoidable and will need to be factored into build contracts.
Where contracts have already been signed, we urge contractors to work closely with their clients to discuss alternative timeframes and contract variations. We have prepared a general statement about the current situation that may assist members in confirming and explaining the current situation to clients.
Where contracts are yet to be signed, it is also important that you can commit to the terms of your contract in light of the trade and material shortages and cost increases.
Do not enter into contracts without a clear understanding of what you are agreeing to do under that contract and without ensuring that you can deliver what you are agreeing to do.
It is only in certain limited circumstances that you will be entitled to an extension of time to the Date for Practical Completion under the terms of your contract. This is also restricted by legislation in Schedule 1B of the Queensland Building and Construction Commission Act 1991.
If the HomeBuilder grant also applies, the owner may become ineligible for the grant if you do not complete the build within the applicable timeframes.
Some builders have sought to include special conditions or provisional sums in their contracts to try to deal with the material shortages and cost increases; however, some have had those contracts rejected by banks. Often these provisions are not legally enforceable because you are required by legislation to ensure that you have certainty in domestic building contracts with very few exceptions.
Our Members Legal team are also on hand to provide advice specific to your contract and situation. We are here for you – contact us for advice if you need to.