One of New Zealand’s largest timber suppliers, Carter Holt Harvey, has proposed 5% to 7% timber price rises by October, according to the country’s largest house-building business, G.J. Gardner Homes.
Its chief, Grant Porteous, is opposing the price rises, saying they are unacceptable in such tough economic conditions and at a time when house-building numbers are down.
Porteous told Herald NOW that his company had said “no” to the price rises from October 1.
They would put even more pressure on house builders, he said.
A Carter Holt source confirmed the 5% to 7% proposed price rise.
He said the rise was entirely justifiable due to input cost increases.
He cited labour costs, but other factors too.
Porteous was talking to Herald NOW host Ryan Bridge today about house construction costs and new home prices.
“Despite this price stability, we’re pushing back on some of the supply chains. We do have some comfortable duopolies in supply that are wanting to put prices up and, I’ll be honest, one of those is Carter Holt Harvey with timber, and we’re saying ‘no’.
“The consumer can’t sustain that at this moment. We don’t see that your input costs have increased. You need to hold your prices for the good of New Zealanders and our industry at the time.”
Asked what response came from Carter Holt Harvey, Porteous said his business was awaiting that.
“It’s a live debate and negotiation, but I think all builders need to have the confidence to be able to challenge any suppliers. What are these input costs that have gone up?”
Porteous cited the housing downturn as having an effect on businesses like his.
“You’ll never build cheaper than you will today,” he said, referring to the house sales downturn and land prices not rising at the levels they had been.
“The cost of building a home isn’t our supply chain or manufacturers. It’s more bureaucracy, red tape, councils, and honestly, MBIE [Ministry of Business, Innovation and Employment] at times over-reaching with the building code.”
Staff at the national chain of Carter’s retail outlets are telling builders of the planned price rises. The directive has come from the head office.
Denver Simpson, Carter Holt Harvey’s general counsel and company secretary, said he had no comment on the timber price rises.
Rotorua-headquartered Red Stag Timber is the other dominant force in the sector in New Zealand.
Red Stag says it employs about 300 staff and has an annual revenue of more than $220 million.
It was established in 2003 to operate the Waipā Mill, in Waikato, which was founded by the Government in 1939 and then privatised in 1996.
Carter Holt Harvey is privately owned by Rank Group, owned by one of the country’s wealthiest men, Graeme Hart.
CoreLogic’s Cordell Construction Cost Index out this month showed a growth rate of 0.6% for the three months to June, for an annual rate of 2.7%, the strongest since the third quarter of 2023.
At the peak of the pandemic, building costs surged 10.4% and the long-term average was 4.2%.
Spare capacity had since increased in the sector as the number of houses being built fell sharply from more than 50,000 to around 33,000 annually.
The report showed varying price moves among key materials, with weatherboard 6% higher but decking timber and ceiling insulation 1% cheaper.
The index is based on the cost of building a standard single-storey, three-bedroom house with two bathrooms, in brick and tile.
Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.