Domestic price of timber

IBISWorld expects the domestic price of timber to rise by 1.2% in 2024-25, to reach $139.2. Demand from timber wholesaling and forestry and logging is expected to rise marginally in 2023-24, due to greater demand stemming from positive economic conditions. This is expected to support demand for timber. However, the volume of wood harvested is expected to rise in the current year, thereby weighing on domestic timber prices. Nonetheless, the world price of wood pulp has increased during the year, which has flown through to domestic prices of both wood pulp and timber.

The world price of wood pulp has been volatile over the past few years, affecting the domestic price of timber in New Zealand. Rising demand for timber from China has supported upward pressure on timber prices over the period. Demand for New Zealand timber has been more resilient in the global market, limiting the decline in domestic prices over the course of the COVID-19 pandemic. This is mainly due to New Zealand's Radiata Pine, which accounts for approximately 90% of New Zealand's harvested forests according to Ministry of Primary Industries. Radiata Pine has a reputation for being high-quality making it highly sought after in both domestic and overseas markets. Additionally, the weak New Zealand dollar has supported export demand over the recent years, while making imported timber relatively more expensive in the domestic market. Over 75% of all wood harvested goes to the export market. This has put upward pressure on the domestic price of timber over the past few years.

Demand from both timber wholesaling and forestry and logging has fallen over the past few years, in large part due to volatility in construction activity since the onset of the COVID-19 pandemic. Nevertheless, rising property prices and population growth have encouraged strong growth in dwelling consents issued over the past few years. This has increased total domestic demand for timber over the period, which in turn has contributed to an increase in timber prices. Overall, IBISWorld expects the domestic price of timber to increase at a compound annual rate of 1.9% over the five years through 2024-25.