Building supplies hard to get, even if you can afford them

Building and renovating costs are increasing at over twice the current rate of inflation, 12% in the year to September 2021. Suppliers raised prices for basic products like framing and retaining timber around 30% last year and further prices increases are signalled for this year.
That’s if you can even get the materials you need. During the summer break I helped a neighbour with her landscaping project. We hired a digger and a dingo to level the yard and spread new topsoil. Once the dusty part was done, I offered to pick up some timber

from our local hardware store for the garden edging.
Not a single hardware store in West Auckland had rough sawn 4x2 or 6x2 in stock, so we ended up using a much more expensive decking timber instead. I had to pick through what was there to find a few decent lengths.
That’s just the tip of the iceberg. New Zealand has a serious building supply chain problem, that has little to do with a post-lockdown DIY blitz. This means the cost of materials is forecast to continue rising at an unaffordable pace, and with that the cost of maintaining and building homes.
The increased demand for materials has tracked steadily upward along with the increase in the volume of new dwelling consents over the past 10 years, from around 1,200 per month in 2011 to over 4,200 per month by September 2021.
That should have given suppliers time to gear up to meet demand, but in the past few years five decent sized sawmills have closed down, representing an estimated 400,000 cubic meters of sawn timber production.
I asked my local hardware supplier what this means to builders and people waiting for their new home or renovation to be completed.
She told me that builders who used to order structural beams one to two weeks before they are needed are now told they must wait 12 weeks. Long delays mean trying to find something else to keep staff busy, very difficult for smaller contractors with only one or two projects on the go.
James Hardie closed their Auckland fibre cement panel factory in 2020 and has instead increased production in Australia. This means that the cost of common cladding products like Linea board and Hardie plank now include international shipping costs and wait times from placing the order to receiving the materials are between 8 to 12 months.
And Covid 19 lockdowns had halted production of local plasterboard products, and now orders are delayed by up to six months. That means the roofing and framing is completed, but there are no walls.
This begs the question – why on earth would suppliers be leaving the market at a time of increasing demand and rising prices, not just here but internationally?
Factors like a strong international demand for logs are outside the control of local businesses and Government, but it is Government policy that has caused labour and energy costs to increase, without any corresponding increase in productivity.
Adding extra public holidays and doubling the amount of sick leave has increased business overheads, and every increase in the minimum wage drives an increase in wages for more experienced workers.
Sawmills and large factories are costly to build and typically rely on a combination of local and overseas funding. However, the overseas investment rules make New Zealand one of the hardest developed countries to invest in, unless you want to plant carbon forests to offset greenhouse gas emissions. But not to grow timber.
Those overseas investment rules, combined with the time, cost and uncertainty of consenting large operations like a sawmill or a factory, mean that investors think it’s just too hard to grow a business in New Zealand even when the outlook is positive.
We need to reduce the uncertainty by clearing away many of the blockages caused by red tape and badly thought-out laws.
That is why ACT will continue to advocate for genuine RMA reform which separates environmental protection from urban planning, and to open up New Zealand to investors who want to grow and produce things here that we need, like building materials.

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