The Hunter building industry warns a huge spike in costs risks sending more companies to the wall.
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The Newcastle Herald reported this week that the collapse of Privium Homes had left would-be Hunter home owners stranded.
The company has attributed its troubles at least partly to record-breaking rises in the cost of materials this year.
The executive director of the Housing Industry Association's Hunter chapter, Craig Jennion, said a sharp increase in demand caused by government pandemic subsidies last year and disruptions to international shipping had created a "perfect storm" to push costs higher.
"It's stressful times for many in the industry, but also for homeowners," he said.
"It's great to be busy, but it's also causing some heartache and stress for the industry."
The Cordell Construction Cost Index showed NSW building costs rising 3.8 per cent in the September quarter and 6.6 per cent in a year, a new record.
But some Hunter suppliers report far greater price increases for many materials.
Saddingtons Building Supplies general manager Anthony Saddington said the cost of many of his building products had risen 50 to 130 per cent in the past year.
He did not predict more builders would go bust, but rapidly rising costs posed a "risk" to those working on fixed-price contracts.
"It's something that needs to be monitored," he said.
The founder and managing director of Terrace Trusses, Reg Vitnell, said the cost of framing timber had jumped 39 per cent since December last year and was due to increase another 10 per cent at the start of next year.
The cost of steel products used in manufacturing trusses had risen more than 27 per cent, and the price of laminated veneer timber was increasing every month.
"The supply shortages are crippling the industry," Mr Vitnell said.
"You're looking at these ridiculous figures from what you were paying back in January. It's just incredible.
"You hear these things like it's up by 5 per cent, but the reality is it's not."
He said the 2019-20 bushfires had affected supply of Australian timber at the same time as surging global demand had made it harder to source overseas products.
"The cancelling of stamp duty and the incentives from the state and federal government, you had a situation like pre-GST that everybody wanted to build a house," he said.
"Even with good supply you would have trouble with pricing."
Mr Vitnell said many in the industry were busier than ever but not making any profit due to the cost rises.
The Australian Bureau of Statistics reported last month that "high levels" of construction activity and supply disruptions had contributed to the largest rise in new dwelling prices since the GST was introduced in 2000.
The manager of importer Newcastle Timber Trading, Craig Kelly, said shipping container costs had risen 500 per cent since June last year as demand increased.
"We've had to pass on these costs to the market," he said. "We've also had significant shipping delays.
"My last shipment for replenishment of stock was due in mid-September. I still haven't seen it.
"We've put out five or six compounded increases into the market this year. All we've done is pass on the increases; we're not price gouging."
He said governments often used the building industry to stimulate the economy".
"Our economy is driven by housing development ... and all of a sudden we don't have these products coming into the country to keep stimulating.
"And you've got builders going broke."
Mr Jennion said many HIA members had closed their books for 2022.
"If you're a home owner trying to say, well, what is it going to cost for that renovation that you can do in early 2023 or the end of next year, it's very hard to estimate where the prices are," he said.
"We've got one of those perfect storms where, unfortunately for the industry, they may be doing some jobs for very small or no margins at all.
"It does create some risks, as we have seen with Privium."
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