Timber Crunch Shifts to Australia in Threat to Construction Boom
(Bloomberg) -- After sending shockwaves through the North American construction industry, a timber crunch is now coming for builders Down Under.
Australia could be facing a deficit of 250,000 wooden house frames over the next 15 years if efforts aren’t made to plant more trees, Master Builders Australia and Australian Forest Products Association said in a report.
The shortage threatens to push up costs and slow projects for the country’s A$212 billion ($154 billion) construction industry, as well as stall progress toward expanding the nation’s housing supply, the two organizations said in the report. Increasing imports, which typically account for around a quarter of Australia’s timber construction needs, is likely to be difficult as other countries are grappling with similar scarcity.
This is “a wake-up call for decision-makers to act now to avoid a construction industry crisis in the next decade,” Master Builders Australia Chief Executive Officer Denita Wawn said in a statement accompanying the report. “We cannot rely on imports to fill the gap when we have increased construction activity -- we need to act now.”
The urgency to expand plantations is exacerbated by the time it takes forests to mature. Pine trees typically need around 30 years before they’re harvested, but demand for new dwellings is soaring as the government seeks to spur economic growth with incentives aimed at boosting the housing market and the construction industry.
The ‘HomeBuilder’ grant, introduced in June 2020, led to a spike in construction activity, but builders are now telling clients that projects requiring timber face protracted delays. Saw-milling operations have added weekend and overtime shifts to get much-needed timber to the market, according to the AFPA, but the supply deficit has only has widened.
Plantations have also shrunk over the last decade, with many forests in New South Wales and South Australia razed by wildfires over 2019 and 2020.
The situation Down Under echoes that seen in North America earlier this year, when U.S. lumber futures surged to a record in May amid a construction boom and low stockpiles, thanks to a surge in home building.
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