A new survey shows that rising freight costs and shipping delays are having a full effect on households.
As the alert level in south Auckland eased on Wednesday, work was expected to resume on more than half of the country’s new housing sites.
However, in addition to the strict social distance rules, there were immediate concerns. Companies are running out of material because many of the goods stored in Auckland are unable to leave the city., Where level 4 lockdown remains.
Now a new survey shows that even supply makers can afford to be more expensive.
* Builders returning to work are more likely to miss out on materials.
* As the fear of construction delays grows, the ‘perfect storm’ intensifies.
* Cost pressures are mounting in the busy construction industry.
Ebas’ survey of 240 residential and commercial building suppliers shows that by July, suppliers were struggling to absorb freight costs.
Two-thirds of those surveyed said it was their biggest concern, and half described the “significant” increase in commodity prices themselves.
As a result, 84% of suppliers have already approved consumer price increases and about 80% are expecting further price increases in the next six months.
Matthew Doder, managing director of Abbas, said it was not uncommon to hear of a 100 percent increase in freight costs.
“Builders would be brave enough to enter into new fixed-price construction contracts with such uncertainty about the future cost of materials,” he said.
“Many suppliers do not seem to be able to deliver the full value of the material and the value of the goods to the customer, which means that margins are narrow and businesses are being affected.”
CoreLogic’s latest Cordell Housing Index was also found. Construction costs were rising sharply.Annual construction inflation is hovering around 4.5% in the June quarter.
The Abbas survey also found that suppliers were relying too heavily on imported goods and were struggling to find enough staff.
Ninety per cent of construction products sold in New Zealand were either imported as finished products or manufactured locally using some imported ingredients.
Most of those who depended on imports had supply problems due to epidemics, while only 58% relied on domestic supplies.
Forty percent of suppliers reported not having enough staff to meet current demand and more than half said they were too small for future demand.
Many of the pressures facing the industry are described in another recent BDO construction report. Observed that contrary to expectations, the construction industry had obtained a new lease of life after the last level 4 lockdown..
The number of residential consent in New Zealand is at an all-time high, and the Building Research Association BRANZ predicts new building consent to live at a record level of over 40,000 for the next four years.
But many large firms were relying on immigrants and staff shortages were so great that the future work pipeline looked uncertain.
The BDO said that some companies are turning away from new work if they do not complete the work.