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Materials shortage and the impact on construction

Amidst a serious talent shortage the construction industry is also facing another significant challenge, materials shortages. With the Global supply chain disrupted by Covid- 19 it’s now not uncommon for building projects to be stalled and waiting on materials for months. Many construction firms, especially in Auckland, have been seeking relief in New Zealand made products, however they are often proving as hard to get as those from overseas. This is resulting in a significant amount of capital being invested into ordering stock months in advance and putting pressure on customers to make decisions early so orders can be made.

Following New Zealand’s August Delta outbreak New Zealand has dropped off the shipping routes for many global material suppliers, with these supply routes now only going as far as Australia. Predictably this is having a significant impact on the price of goods, in some cases hyper increases of 10% - 15% compounding quarterly across staple materials like timber are being recorded. 

From a customer’s perspective construction companies are reluctant to offer fixed priced jobs due to the increasing prices caused by the shortages and escalation clauses are being included into contracts to allow for rises in materials. This in turn could make the process of getting a mortgage harder for residential builds where banks favour fixed price builds, especially for anything under a 35% deposit. 

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