Domestic price of timber

IBISWorld forecasts the domestic price of timber to climb by 0.7% in 2024-25 to 190.2 index points. The Federal Government has introduced multiple initiatives in the Budget 2024-25 to address the housing shortages in Australia, which is set to boost demand for timber required for building houses. Strong demand for timber and inflation are expected to keep timber prices elevated in 2024-25.

Domestic timber prices generally fluctuate in response to the supply of harvested timber. Timber harvesting is generally highly cyclical, relying predominantly on plantation trees coming to maturity and, to a lesser extent, harvest and regrowth cycles in native forests. When timber harvesting volumes peak, prices generally decline in subsequent years as downstream processors build up inventories and reduce demand for new inputs. For example, heightened harvest volumes over the three years through 2018-19 led to excess inventory accumulated by some downstream timber processors, partly contributing to the sharp decline in the domestic price of timber in 2020-21. Meanwhile, declines in wood harvested typically trigger a price rise in the following years. Timber processors aim to replenish their inventories and fulfil supply contracts, pushing up prices. This trend was reflected in the timber prices of 2021-22, as wood harvest volumes sharply declined over the three years to said year.

Domestic price of timber has increased over the past five years. Timber prices spiked over the past two years through the end of 2022-23 when the global supply chain disruption triggered by the COVID-19 outbreak led to timber shortages amid high demand. Economic recoveries following the pandemic, together with government support on new residential construction, have stimulated demand for timber required in the construction sector. Overall, IBISWorld forecasts the domestic price of timber to grow at a compound annual rate of 3.1% over the five years through 2024-25.