Why waiting on renovations can cost you money in the long run

04 Feb Why waiting on renovations can cost you money in the long run

If you’re thinking about having renovations done on your home, it’s usually the case of ‘the longer you wait, the more expensive it will become’. There are many reasons for this but in 2022 we’re seeing this more and more. Let’s dive a little deeper into why this is happening.  

Why building materials are getting more expensive

There’s no doubt that building materials are getting more expensive. We’re seeing it in housing prices, renovation prices and even getting timber or steel from your local hardware store will cost you more these days. Let’s take a look at some of these building materials and why they’re getting more and more expensive. 

Wood

Even though wood is grown extensively throughout Australia, mill capacities – once reached, can’t produce more wood than their mill can make. Combine this with many people being stuck at home during lockdowns throughout 2020-2021 who had time and money on their hands to get around to those building and renovation projects they’ve been putting off. This put a huge stress on the demand for wood all over the country. 

Then we throw in most of Australia being on fire in 2019-2020 which burnt down a considerable number of commercial plantations, staff shortages at mills, forestries and timber processors, etc due to COVID and you can see why there’s a large market demand for wood that the producers of wood products can’t keep up with. 

This increase in demand and scarcity of product has seen wood increase in price by over 35% along with adding considerable delays to delivery schedules. 

Steel

Whilst Australia is great at digging core elements out of the ground that ultimately go into making steel, we’re not great at producing it here. Two of Australia’s major steel producers Arrium and Bluescope have both faced struggling share prices and an increased cost in the production of steel which has led to the closing down of multiple blast furnaces over the past few decades.

This means our building industries must look elsewhere to get the steel needed to keep houses, skyscrapers, railways and other construction projects being built and running on time. Many importers look to China to get steel but shaky relations and cuts to exports due to COVID have made a significant impact on the availability of steel in the past couple of years. 

Combine with this local and state government pushing infrastructure projects such as the 1,700km Inland Railway project in Sydney, Melbourne and Perth that all require vast amounts of steel for both tracks and platforms and you can begin to see why steel is in such short supply. 

Bricks

Here in Australia we make a lot of bricks. Almost all the bricks we use in construction projects are made here in Australia. We do import some bricks from overseas, but these tend to be higher-end or artisan bricks which make up a very small proportion of overall construction projects. 

The issue with bricks at the moment is from several different factors. The raw materials used to make bricks are more expensive because of supply chain issues (ie. a shortage in particular materials means more people want to get their hands on it, hence the price goes up – supply and demand). 

Low interest rates and the government’s HomeBuilder Grant has also put pressure on the building sector that’s already struggling to find tradies because of COVID. 

Gyprock

Combine strikes at CSR Gyprock Yarraville factory, delays and scarcity of raw building materials and state border closures, COVID restrictions and a reduction in staff capacity in manufacturing plants due to COVID, it’s little wonder there’s a delay on gyprock being delivered into Queensland building sites. We’ve heard of up to 10 week delays in some cases. 

Combine all these elements together (particularly the wood shortages as this impacts on a builder’s ability to make kitchen cabinets, door, jambs and architraves, etc) and you can see why not only is the cost of renovations and building projects in general going up, but they’re also being delayed due to shortages in materials. 

If you have gotten a quote from a renovation company in the past 6 months, it’s very likely they will have a clause in the quotation about the timeframe the quote is valid for. We’ve seen an estimated 5% overall increase per month in building material costs and it doesn’t look like this will be alleviated anytime soon. 

This means if your renovation project is quoted at $150K, in six months time you will likely need to add an additional $7,500 onto the project – more if you delay longer. 

If you’re thinking about renovations or additions for your home, get in now before prices rise and inevitable supply chain delays chew through your budget.