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SA government calls for ACCC investigation into price gouging in construction industry

Building costs have risen dramatically due to global supply chain disruptions. (ABC News: Michael Lloyd)

Potential price gouging in the construction industry could be investigated after the South Australian government called on the consumer watchdog to intervene.

Minister for Housing and Urban Development Nick Champion has written to the Australian Competition and Consumer Commission (ACCC), asking it review increased building costs and their impact on housing affordability.

Mr Champion said he did so with the support of the state's peak construction body, Master Builders SA, which also expressed concerns that rising costs could hurt the industry.

"We’ve seen reinforcing steel go up 43 per cent, structural timber up 39 per cent," he said.

Disruptions to global supply chains through COVID-19, the conflict in Ukraine, and lockdowns in China have caused prices to spike, but Mr Champion said he wanted to limit the impact to Australia.

"When we get big price increases for a number of materials, that creates perfect conditions for people to price gauge, to increase margins, and we want the ACCC to take a role in monitoring that," he said.

Mr Champion also called upon the federal government and other state premiers to take action.

Labor MP Nick Champion is calling on the federal and other state governments to take action. (ABC News: Nick Haggarty)

Industry welcomes inquiry

Master Builders Association SA's chief executive officer Will Frogley welcomed a potential ACCC inquiry.

He said it was "certainly the view of many in the industry" that price gouging was occurring.

"If people think the ACCC is looking into the issue, perhaps they won't take those opportunistic price increases."

He added that while ABS data showed the cost of building products rose by 3.8 per cent during the December quarter, the feedback "from the ground" was that prices have over-compensated.

"Builders and home buyers are facing unprecedented price increases, and I think it's reasonable to ask the ACCC to make sure they're all legitimate price increases," he said.

Mr Frogley said while Master Builders hoped prices drop as supply chains stabilise, he was not optimistic of a quick fix.

"Over time, [we] hope these pricing increases abate as supply chains reorganise ... but I can’t really see things improving before the end of this year."

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