A report from Master Builders NSW has revealed the massive increase in prices that building materials have attracted over the last 12 months.
The cost increase will be of no surprise to anyone in the trade, but to see the numbers presented like this is quite startling.
- Reinforcing steel – up 43.5%
- Steel beams/sections – up 41.5%
- Structural timber – up 39.2%
- Plywood and board – up 29.8%
- Electrical cable and conduit – up 27.1%
- Plastic pipes and fittings – up 26.5%
- Copper pipes and fittings – up 25.7%
- Terracotta tiles – up 21.5%
- Metal roofing and guttering – up 19.9%
- Insulation – up 14.0%
The overall cost increase for the year is over 15%, which Master Builders NSW says is the highest rate of growth for over forty years!
Master Builders NSW is concerned that more builders could go under if they are unable to renegotiate fixed price contracts with their customers.
“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.”
Not everyone will agree with renegotiating a fixed price contract, which by it’s very name suggests that it shouldn’t be changed, but they certainly have a point that renegotiating is far better for the customer than having the builder collapse.
It’s a tough situation, but those numbers certainly show that it’s going to be very tough for builders and tradies who are unable to pass on these big price increases.
For more data and some interesting charts please check out the original report on the Master Builders NSW website.