The pandemic and subsequent lockdowns and global shipping delays have led to a shortage of supplies.
The current New Zealand lockdown has added further pressure as critical products have not been able to be shipped out from the Auckland region.
The Government has acted on the issue and announced yesterday it would allow manufacture in Auckland of the four most critical products - plasterboard, gypsum plaster, coated roofing steel and insulation.
Dunedin Builders Ltd owner Leon Eru said he had received emails from suppliers warning of increasing prices and delays of eight to 12 weeks.
Builders needed to factor price changes into their contracts or else risk being hit in the pocket.
‘‘If you haven’t factored that in, I can see that biting into your profit margins.’’
Despite the shortage in materials, a lot of work was still coming in, but the long-term impact of Covid-19 was not yet known, Mr Eru said.
Clauses allowing for price increases were becoming more common in loans given to homeowners carrying out projects.
Dunedin’s Mortgage Me co-owner Daryl Taylor said banks were ‘‘pretty keen’’ to ensure prices were not fixed in home build contracts.
He believed price increases were affecting people with a smaller deposit more, as they had less room to move in their mortgages.
‘‘With a 10% deposit, banks are saying there can’t be any cost overruns because often the banks are at the maximum end that the client can borrow.
‘‘There is no ability to go over and above that contracted price.’’
Home builders who were not so reliant on finance and had sold a house at the higher end of the property market might have more room to move in terms of cost overruns, Mr Taylor said.
‘‘But for the lower-deposit people, banks are making sure there is no ability for cost overruns because nobody is going pay for it,’’ he said.
Some people were being forced to scale back their plans as a result.
Master Builders chief executive David Kelly warned a recent construction webinar against ‘‘not being talked into’’ a fixed-price job.
‘‘You don’t know what’s going to happen.
‘‘Clients will want a fixed price - I understand that. Builders like to help people.
‘‘But you have to preserve your margin, and be very, very wary.’’
The construction webinar heard that ways to manage the problems included involving a contractor early on in a build and locking in what products were specified for use, and the price, off finished drawings.
- Additional reporting RNZ
