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According to BusinessDesk, Carter Holt Harvey is unable to fulfill supply commitments to the companies, citing "critical supply issues" as demand for new houses spikes.
Through an internal memo to staff and shareholders, ITM chief executive Darrin Hughes detailed CHH's decision to no longer supply timber to its roughly 100 stores nationwide.
"This is a massive decision on CHH's part and one that will have ramifications for years to come," the memo said.
"We spend almost $34 million with CHH per annum so I know this will have a significant disruptive impact on many of your businesses."
New Zealand Certified Builders Association chairperson Mike Craig said the move could see some builders go out of business.
"Some of the smaller builders who just do one house at a time and they can't get product, what do they do with their workers?
"You could see that it'd have a real knock-on effect where workers have got no work, the builders haven't got cash flow, and they could go under because they haven't got enough capital."
Craig said the companies' ability to service builders' requests was partly dependent on how much product they had in reserve. He believed timber supply companies had been stockpiling since November, with some branches hiring warehouses to store extra timber.
Craig saw CHH's decision as emblematic of a global problem whereby increased demand was delaying supply shipments. He referenced the usual 12-14 week wait for windows from Europe had blown out to six months. Domestically, some builders were waiting up to three times longer for product.
"It's a very, very big problem," he said.
As a result, builders had been taking on more work which extended project deadlines, and were forced to use alternative products which heaped more work on local councils processing new resource consents.
It comes after the Government's major housing sector shake-up was announced on Tuesday, aimed at levelling the playing field for first-home buyers and reeling in soaring house prices.
Among the changes were:
• Extending the bright-line test from five to 10 years, meaning those who sell a house other than their family home within a decade will have to pay tax on the capital gain.
• Axing a tax break that allowed investors to claim home-loan interest repayments as a business expense.
• Pouring $3.8 billion into a scheme to accelerate infrastructure supply, such as vacant land, for new homes.
• Allowing the Kāinga Ora housing agency to borrow a further $2 billion to buy land for housing.
• Lifting the First Home Grant caps from $85,000 to $95,000 for single buyers, and from $130,000 to $150,000 for two or more buyers.
• Raising the price threshold for eligible houses by up to $100,000 in some parts of the country.
Auckland's median sales price soared to $1.1 million in February, jumping almost 25% year on year. National prices climbed 23% to $780,000.