Saturday, 8 October, 2016
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Housing Construction Costs To Soar Due To Lower Dollar

Housing Construction Costs To Soar Due To Lower Dollar

  • Warnings of crippling building costs
  • ATIF warns of 20 % increase in cost of timber
  • Are Australian building costs already too high?

Warnings are being heard of crippling housing and construction costs due to the fall of the Australian dollar.

ABIS was advised that the Australian Timber Importers Foundation warned that a 20 % increase in the price of local and imported timber would affect the commercial and domestic building industry.

About 80,000 jobs are tied up with imports of timber. This equates to about 10 % of all wood products used. The industry would be negatively affected by rising import costs with a lower Australian dollar.

Some major Australian wood processors view it positively as it would give them more traction than they had before.

ABIS believes that this certainly would have an impact on the $7 billion addition and alterations market in the 150,000 dwelling starts each year as we see both domestic and imported products climb in price.

A Forest and Wood Products spokesman said that the drop in the Australian dollar would benefit local wood processors.

A number of architects and building companies are using an alternative to timber. It’s called INNOWOOD, a composite material which can be easily extruded into a multitude of profiles for internal and external applications.

The raw material is obtained from natural recycled wood and bonded using a thermoplastic polymer without using harmful volatile chemicals (non-toxic). The product remains stable under conditions where moisture is present and it’s free of formaldehyde and not affected by termites.

It has the benefit of being self- extinguishing, sustainable and environmentally friendly and can be recycled (multiple times). The installation is quick and the product is light-weight.

As ABIS understands, INNOWOOD – based in Sydney – appears to be well-placed as an alternative to timber as the world is rapidly depleting its forest and timber resources. As always, cost remains an important point for the building industry. It seems that INNOWOOD has been very competitive in price on a number of projects.

At Sydney’s Darling Harbour Mini Zoo, the project was won using INNOWOOD over using recycled Australian hardwood that had been specified by the Architect. Not enough recycled timber could be sourced in Australia for this project. The construction cost was substantially reduced due to lightness of the product. No structural wall was required and the design incorporated a quick and easy installation. The estimated saving for the builder was $360,000.

On Wharf 8 and 9 the Architect specified a timber batten to run down to the water line and encircle the two wharfs. The builder realised that using timber in this location would create a high maintenance requirement. INNOWOOD demonstrated through testing by CSIRO that INNOWOOD absorbed a maximum of 1.3% moisture and would not twist swell or warp. This saved the builder substantial monies in re-work and construction cost. The saving over a 5 year period was estimated to be $150,000 in repairs and replacement.

Established in 2005, INNOWOOD leads the way in the supply, design, development, manufacture and installation of composite timber products and systems for both commercial and residential applications.

The overall costs of home building and construction in Australia has once again raised the question as to whether building is too costly and too hard.

ABIS understands that there is an ever increasing call for governments to commit to regulatory reform to boost productivity in the building industry.

Mr Dale from the HIA said that ‘outside what was happening to material prices and labour prices in the residential sector, it is a fact that it is a very heavily taxed and regulated industry’.

Sydney, for example, is among the five most expensive cities in the world to build an office tower or apartment building, according to a United States engineer and project manager from AECOM.

AECOM, a project management and engineering firm collated data from 10,000 projects of the world to rank Sydney as number 5 as the most expensive in the world for each category of development, mainly because of high labour costs and a lack of collaboration between stakeholders.

AECOM CEO for Australia and New Zealand said that the culture of Australia’s building and construction industry needed to change.

A spokesman for ABIS was told that another cost factor affecting the amount of houses being built is the high price of land. ABIS understands that land sales were a key indicator of new homes being built.

In the March quarter, the median value for residential land in capital cities rose by about 3 % to approximately $225,000 and in regional Australia the median value rose by about 0.7 % to nearly $156,000.

The Coalition has promised to revive the Australian Building and Construction Commission to look into union workplace practices if it wins the upcoming federal election.

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About ABIS

Founder of The Australian Business Information and Editor of The ABIS Newsletter - Building Industry Edition

One comment

  1. Interesting story. My costs are too high as they are and I can’t really afford higher costs on my timber frames. I worked in the United States for some years. Many timber products and frames were warped from being stored outside and therefore making it difficult for home construction. That is when steel framing took off – always straight and termite proof. Innowood is a most interesting product. A true alternative to timber. I wish they could make house frames.

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