Platinum Pacific Group Look at Steep Price Increases in the Building Industry

Saturday 1 January 2022, 3:21AM
By Beckie Wright

Last month we discussed the shortage of building materials in New Zealand due to the pandemic, and this month we look at the subsequent price increases. This comes as huge demand worldwide has pushed the price of building materials up significantly in the past year. And it doesn't look like it's stopping anytime soon.  

Builders are talking of bringing back clauses which pass rising costs onto consumers, as prices for building supplies continue to soar. “In the days of high inflation, the escalation clauses were standard in contracts and that is starting to happen again,” Grant Florence, chief executive of Certified Builders, said. Florence said the clauses fell into disuse as low inflation kept prices down. But as global supply chain problems sent freight costs skywards and dragged out delivery times, they were set to return. 

"We've seen an absolutely huge escalation as it's been the combination of a perfect storm. During lockdown there were materials that weren't being produced and China went offline and then once people got COVID under control, there was massive demand right across the world.

"I think fixed pricing, which is generally what most people would prefer including banks and lenders, is going to become a thing of the past. The amount of administration that goes on behind the scenes to try to isolate what these price increases will be is huge, so I think what we will see is more transparent open book costing.

The building industry has been feeling the pinch from increased prices for several months with many suggesting it could make New Zealand's housing crisis even worse.  

A survey by the Registered Master Builders in August found 95 percent of companies were experiencing issues with delays, increased costs, customer complaints and product substitutions due to a lack of materials. 

Price hikes vary depending on product. According to the Building Industry Federation, steel products have jumped in price by 15 to 21 per cent, concrete and cement products are up 7 per cent, and prices for decking, timber, and plywood are up between 6 and 20 per cent. 

Regarding new builds and renovations, it is still relatively easy at present to secure materials, as long as the builder is involved in the design and consent process, and there are no changes to plans during the build. This allows for the builder to identify products that require extended lead times and to alternate these with products that have shorter lead times.  

Platinum Pacific Homes have ensured, through forward planning and quality system processes, that they are able to get all the building materials they require for both their current projects and those in the near future, so with this in mind, please take a moment to find out more about leaky home cladding and recladding weatherboard houses by visiting the website at .