Shortages hit home Housing grants, natural catastrophes and the coronavirus have combined to create challenges for insurance building and repair work By Wendy Pugh
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fter towering eucalypts toppled over during storms that hit Victoria’s Dandenong Ranges in June it was pointed out there was a lot of value in the fallen timber. As part of the clean-up, state-owned VicForests is looking to buy logs that meet specifications and there’s likely to be strong demand for any resulting processed building products. Timber is among materials affected by shortages caused by a confluence of natural catastrophes, the COVID-19 pandemic and government actions to power the economy through difficult times. The building supply side is struggling to keep up with demand across the country, material costs are increasing, and the insurance sector and its customers are navigating the difficulties. “There’s no doubt that material shortages are posing challenges for the industry at the moment,” Suncorp Head of Home Claims, Queensland Joel Manning tells Insurance News. “The supply chain has been disrupted by COVID, and economic factors closer to home are compounding the challenge of slower imports. With international travel off the table, record low interest rates and government incentives such as HomeBuilder, Australians’ appetite for renovations and new homes is driving huge demand for materials.” The Federal Government’s HomeBuilder stimulus, offering grants for new homes or substantial renovations, has attracted strong take-up and, combined with the low interest rates and state-based programs, has spurred a housing activity surge. The program received more than 121,000 applications – four times original expectations – with $25,000
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grants offered from June last year before scaling back to $15,000. The eligibility deadline for starting construction was in April, extended from six to 18 months after building industry groups warned tight timeframes mightn’t be met due to material backlogs and skilled labour shortages. The Housing Industry Association (HIA) describes HomeBuilder as the largest direct injection of government money into the owner-occupier housing market in Australia’s history, while forestry and wood products data analysis firm IndustryEdge says it has contributed to a boom without precedent. IndustryEdge Managing Director Tim Woods says housing is highly responsive to stimulus measures and has become the modern “go to” in times of economic trouble, but the current scenario has resulted in hyper-stimulation. “Demand is just off the wall and it has grown at the fastest-ever rate, so no supply chain can keep up; it’s just impossible,” Mr Woods tells Insurance News. “Economic interventions are always a balancing act and sometimes we overtip the balance.” While the demand stimulus has addressed economic stresses caused by the pandemic, the coronavirus has also complicated supply issues, with outbreaks and restrictions hindering the movement of materials locally and internationally and further contributing to shortages of tradespeople. The HIA Trades Availability Index shifted marginally from -0.55 to -0.53 in the June quarter, as the industry experiences one of the most significant skills shortfalls of the past 20 years. “This small improvement reflects quarterly
