How the global supply chain crisis could affect the property market

Real Estate

Team MONEYME|19 July 2022| 2-minute read

The global supply chain crisis has been causing issues year-round, but it’s not just holding up orders from The Iconic, it’s slowing down construction, manufacturing, and mining. What could be some of the flow-on effects for the property sector?

How did this crisis kick off?

If you’re wondering why your online deliveries seem to be taking forever, the pandemic has caused major disruptions to the global supply chain network. Raw materials are in short supply, manufacturing is on pause, and there are massive delays in shipping. Lockdown forced millions indoors, and with nothing to do but shop online, their orders clogged up supply chains even more.

It’s also been a logistical nightmare coordinating transport for anything you buy from overseas. Over the past two years, ships have been stuck out at sea unable to dock after countries closed their borders. The sideways Suez canal saga in March also did little to help. The huge container ship tipped over and blocked one of the world’s busiest shipping routes (remember the memes).

What else could go wrong? Well, there’s also been a shortage of shipping containers so online orders are taking longer than usual to set sail in the first place. At one point things got so bad that US President Biden ordered some ports to stay open 24/7. 

The crisis has consumers and retailers sweating in the lead-up to Christmas. Industry bodies like the ACCC are warning customers to get on top of holiday shopping sooner rather than later.  It’s also sparked fears for construction with key materials like steel and timber running low in supply.

What chaos could this crisis cause for the property sector?

Aside from the dreaded scenario of presents not arriving for Christmas, supply chain issues could also increase the price of some products and cause delays for industries like construction. That has put renovators and those looking to make touch-ups or repairs ahead of a sale on high alert. 

Economists are saying there’ll be a big jump in costs for those looking to renovate. AMP Capital chief economist Shane Oliver told The Sydney Morning Herald that things like electrical fittings, timber, copper, and aluminium fittings are all experiencing price hikes. The construction boom sweeping the country is doing little to help matters. Restless renovators are climbing over one another to get their hands on raw materials and builders for that matter, pushing prices up even further. 

Key Takeaways:

• Plan ahead – you don’t want to be stuck waiting for that last piece of furniture to arrive or for renovations to wrap up before you list a property on the market.
• Don’t forget to budget –  you need to make sure you factor in price hikes when making proposals to vendors about home improvements, and any repairs or renovations.

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