Structural timber prices up 26.0% in September quarter

 Compared with the September quarter of 2020, local structural timber prices were up an average 26.0% in the September quarter of 2021, latest industry data prepared by FWPA shows.


As other items in this edition of Statistics Count demonstrate, the cost of building materials is one factor pushing up inflation currently. Because it is the dominant and near ubiquitous product, much of the emphasis has been on the rising cost of timber, but the reality is that all materials have been similarly impacted.


For the September quarter alone, the main structural timber grades – both treated and untreated <120 mm saw regional weighted average prices lift between 11.7% and 19.8% compared to the June quarter, which saw national weighted average price increases of 12.4% for Untreated <120 mm (AUDFis638/m3) and 12.6% for Treated <120 mm (AUDFis708/m3).


Both of these main grades, shown in the two charts below, saw weighted average September quarter prices 26.0% higher than for the September quarter of 2020.



To go straight to the dashboard and take a closer look at the data, click here.


To go straight to the dashboard and take a closer look at the data, click here. 


The recent increases are substantial, but many anticipated they would be seen earlier in the cycle, given the strength of demand for new detached housing. Speculation is widespread about the causes of restraint, but the main drivers appear to be contracted or announced prices lagging the surge in demand that has placed the supply chain under enormous pressures.


It is noted that other grades have experienced similarly large increases in regional and weighted average prices, but few are as significant as those directly linked to the housing sector.


Full Softwood Weighted Average price data can be analysed on the FWPA Data Dashboard


The Australian experience must be contrasted with the scale and pace of price rises experienced in the US market. The chart here shows the very dramatic rise in framing lumber prices and the equally sharp slump that followed.


A more openly traded market, where there are many more suppliers and customers and in which increased costs are routinely able to be passed on to the home buyer, is always likely to be more prone to radical price movements.




Source: Random Lengths, NAHB


From an Australian perspective, the possibility of following the dramatic movements in the US pricing structure seems decidedly low. The supply chain cannot – in states like Victoria where building contracts are mainly fixed price as a matter of law – pass on full cost increases and where the number of market participants is smaller, the ‘room to move’ is more limited.


Relativities aside, the real question is whether Australia is at the peak of its cycle. For that we will have to wait for at least one more quarter of data. Certainly some on the ‘buy side’ have suggested price pressures are moderating. The Stockland CEO, Tarun Gupta, was reported in the Australian Financial Review as observing that market conditions for building suppliers were moderating. He commented, “ the supply of goods mainly timber is where we have seen a bit of tightness but its easing over the quarter”.


Whether that expectation is consistent – big builders may have a different experience to smaller builders after all – is something we are unlikely to confirm until early 2022.