Master Builders NSW can report that building material costs are now increasing at their fastest rate since 1980. Right across Australia, the cost of materials used in house building has increased by +4.2 per cent during the March 2022 quarter and are now +15.4 per cent higher than a year ago (see charts below).
The pace of increase was similar across all six capital cities. Over the year to March 2022, the sharpest price increases included:
- Reinforcing steel (+43.5 per cent)
- Steel beams/sections (+41.5 per cent)
- Structural timber (+39.2 per cent)
- Plywood and board (+29.8 per cent)
- Electrical cable and conduit (+27.1 per cent)
- Plastic pipes and fittings (+26.5 per cent)
- Copper pipes and fittings (+25.7 per cent)
- Terracotta tiles (+21.5 per cent)
- Metal roofing and guttering (+19.9 per cent)
- Insulation (+14.0 per cent)
This unprecedented material costs increase is putting immense financial strain on builders who have signed fixed price contracts and are now, through no fault of their own, facing huge losses.
It is no one’s interests for their builder to go to the wall over a fixed price contract that could not have foreseen these increases. Clients with builders that go under will be left to navigate complex insurance claims and may in the end be both out of pocket and unable to secure a builder to finalise construction. It is a far more sensible approach to re-negotiate the current contract considering the unforeseen changes in material costs and timeframes.
MBA NSW strongly encourages all parties who have signed contracts to build to be flexible and realistic, and seek to re-negotiate building material costs components of fixed-price contracts.