Is There Enough Timber? What Australia's Forest and Wood Products Report Means for Your New Home

Introduction: Timber, Trees and the Truth Behind the Shortage

If you're planning to build a new home in Australia, there's a good chance your builder—or your budget—has already mentioned timber. Maybe it's a delay. Maybe it's a price increase. Porque no los dos?

Maybe it's both.

So what’s really going on?

A recent report commissioned by the Australian Climate and Biodiversity Foundation (ACBF) looks at how we grow, harvest, mill and use timber across the country, and what that means for housing, jobs and climate goals.

Here’s the short version: Australia’s forestry sector is small, but important (mighty but fighty?). Most of the timber used in house construction comes from softwood plantations, not native forests. But those plantations are under pressure—slow to grow, hard to expand, and vulnerable to fire and land-use competition.

The report makes one thing clear: if we want to keep building homes at the pace the country needs, we’ll have to get smarter about how we grow and manage timber.

If you want the supply forecast in more detail, read our companion post, Australia's Timber Supply: Forecast to 2050. This one focuses on what the industry's economics mean for your build.

Australia's Forest and Timber Sector: Small but Mighty? 😄

Let’s start with the big picture: forestry and timber products make up less than half a percent of Australia’s economy. That might sound small—but for something so small, it punches above its weight (mighty).

Why? Because timber plays a foundational role in what we build and how we build it.

• The industry adds about $9 billion in value to the economy each year.
• It supports over 50,000 jobs, with around 20,000 of those in regional areas.
• It provides timber for everything from house frames to furniture, paper, packaging, and firewood.
• Forests themselves offer benefits that go beyond timber: they clean the air, store carbon, support biodiversity, and even fuel tourism and recreation.

And what about what we use?

Despite our growing population, Australia’s total timber consumption has stayed flat since 2000, and dropped by more than 20% per person. Hardwoods have taken the biggest hit—dropping from half of consumption in the 1970s to less than a quarter today. Meanwhile, softwood consumption has grown slightly in total, but shrunk per capita.

The bottom line: even though forestry is a small slice of the economy, it's very important to housing, and that role is growing, not shrinking.

Softwood vs Hardwood: Two Very Different Stories

Not all timber is created equal—and the difference between softwood and hardwood is more than just density.

When it comes to residential construction in Australia, softwood is king. It’s what most house frames are made from. It’s fast-growing, easier to process, and mainly comes from purpose-grown plantations—especially pine species like radiata pine.

Here’s what the report makes clear:

• Softwoods make up around 75% of construction timber.
• They account for about 60% of all domestic wood use.
• And they deliver 70% of the industry’s value-added output.

In other words, softwoods do the heavy lifting for Australia’s housing industry.

Hardwoods, on the other hand, tell a very different story:

• Most hardwoods come from native forests or older plantations.
• Over 90% of hardwood is used in low-value products—think firewood, mulch, pulp, and woodchips.
• These are often exported, not used locally.
• Only a small portion becomes high-value products like floorboards, furniture, or veneers.

Even though those high-value uses are a tiny slice of hardwood volume, they represent about half of the total value generated from native forestry. It’s the classic “a little goes a long way” scenario.

So if you’re wondering why your hardwood flooring is expensive and possibly on back order—it’s because high-grade, local hardwood is limited, and most of our hardwood trees are being chipped or burned instead of milled.

Where the Value Lives: Manufacturing, Not Logging

It’s easy to picture forestry as people cutting down trees—but that’s not where the money is made.

According to the report, over 80% of the industry’s value comes from what happens after the tree hits the ground. That means:

• ~65% from manufacturing (turning timber into products like frames, cladding, panels, and paper), and
• ~15% from primary processing (like milling logs into sawn timber).

By contrast, logging—the act of harvesting the tree—accounts for only around 3% of the wholesale margin. In financial terms, logging is a tough business. There’s more profit in turning timber into things people can use.

All this adds up to one simple truth: if you want reliable, affordable timber, the smart money is on softwood manufacturing.

Declining Harvests and Disappearing Native Logging

Here’s a main point from the report: Australia’s native forest logging is winding down—and it’s not coming back.

According to the report, native forest wood production is in structural decline, and it’s been that way for years:

• Since 2004, production volumes have dropped by about 80%.
• In 2024, Victoria and Western Australia officially ended native logging, further shrinking supply.
• In Queensland, harvesting of state-owned native timber in the South East Queensland Regional Plan area ended at the end of 2024, and permits in the rest of the SEQ supply region (including Wide Bay) run to the end of 2026.

Why? A few key reasons:

• Low returns: Government-run logging operations often earn less than 3% return, sometimes even losing money.
• Environmental pressures: Carbon storage, biodiversity, and recreation values are increasingly being prioritised over timber.
• Policy decisions: States are recognising that the long-term economic case for native logging just isn’t stacking up.

Meanwhile, new plantation establishment has stalled, especially for hardwoods. Since 2010:

• Hardwood plantation area has declined by ~30%.
• Softwood area has remained flat, with only a small recent uptick.

Plantation returns aren’t great either. Once you factor in land costs, the average return (IRR) for new plantations is:

• 1–2% for hardwoods,
• 2–3% for softwood sawlogs.

Without added income streams—like carbon credits or government grants—most new plantations simply don’t make financial sense.

So, we’re left with this reality:

• Native hardwood is fading out.
• New plantations aren’t replacing it fast enough.
• And natural disasters like the 2019–20 bushfires have only made things worse—damaging over 130,000 hectares of commercial plantation land.

Regional Dependence: The Timber Towns Behind the Supply

Most of the sector's roughly 51,000 jobs are in regional Australia, and they're concentrated in about 60 to 75 communities where timber work is a big share of local employment. As native logging winds down, those towns face a tough transition, and logging and milling workers have the fewest alternative jobs nearby.

Demand vs Supply: Can We Keep Up with Construction Needs?

Here’s the million-dollar question for home builders: is there enough timber to go around?

The short answer: not right now, and maybe not later either—unless we plan carefully.

The report discusses three possible future scenarios for housing demand, based on population growth, household size, and the mix of houses vs apartments:

1. Surging Suburbia – High population growth, mostly standalone homes.
2. Urban Growth – Moderate growth with a mix of apartments and houses.
3. Small is Beautiful – Slower growth, more compact housing.

Depending on which path we follow, Australia could need anywhere from 100,000 to 225,000 new dwellings per year by 2060. The higher end of that is more than we’ve ever consistently built before.

Here’s the big challenge:

• Most of that housing demand relies on softwood timber.
• Our current plantations and mills can supply timber for around 180,000 to 200,000 homes per year—at best.
• But in the short term (i.e. the next 5 years), demand is peaking as we try to catch up from years of under building.
• That means timber shortages are already happening, and the system is under stress.

Expanding supply isn’t as easy as it sounds:

• Plantations take decades to mature—so even if we start now, they won’t help in the short term.
• Mills are cautious about expanding in case the demand boom doesn’t last.
• 👉️ That means we’ll likely see increased reliance on imports to plug the gap—especially for structural softwoods.

Some local sawmills already have excess capacity (not enough logs to run full tilt), while some logs don’t have mills nearby to process them. So even if we have the trees, logistics and location matter.

Not All Gloom: The Case for Plantation Softwoods

Amid all the pressure on timber supply, there’s at least one positive trend: plantation softwoods are making a slow comeback.

After more than a decade of flat lining, 2023 saw a small uptick in new plantation activity, especially for softwood species. What’s driving this shift?

A few key factors:

• Government grants are being used to support new plantations and mill upgrades.
• Carbon credits (ACCUs) are starting to make timber more financially attractive—especially when they generate revenue early in the plantation lifecycle.
• Confidence is returning, even if the economics still aren’t perfect.

In fact, in some cases, the report suggests carbon revenue could double the return on a plantation investment, turning a low-margin gamble into something actually viable.

That’s good news, especially given the long lead times. Trees planted today won’t be harvested for at least 25–30 years. So any momentum now is important if we want to meet construction demand in the 2040s and beyond.

Of course, there are still risks:

• Bushfires, like those in 2019–20, damaged over 130,000 hectares of plantation land.
• High land prices make it hard to justify plantation investment, especially for hardwoods.
• Permanent carbon forests (which don’t get harvested) might become more attractive than production forestry, further reducing log supply down the line.

But even with all that, the signs are cautiously optimistic. If we support the right policies—and continue to value timber as both a construction material and a climate solution—plantation softwoods could be the long-term fix we need.

The Climate Connection: Carbon, Biodiversity and Competing Land Uses

It’s no longer just about cutting down trees for timber. Forests now play a much bigger role—in climate policy, biodiversity protection, and carbon trading.

One of the biggest shifts happening right now is the recognition that leaving forests standing can be more valuable than logging them.

The report highlights how:

• New carbon credit methods—like the Improved Native Forest Management (INFM) method—let states earn ACCU revenue by ending native forest logging.
• This could mean up to 43.5 million carbon credits, about $2 billion in net revenue, and still support 600+ jobs through alternative forest management.
• Preserved forests contribute to carbon sequestration, protect biodiversity, and support tourism and recreation.

While carbon forests bring environmental value, they compete for land with production forestry (the kind that supplies timber). If prices for carbon credits keep rising—as expected under Australia’s Safeguard Mechanism—we could see more landowners opt for permanent carbon planting instead of growing timber that can be harvested.

That’s not a bad thing for the planet—but it does mean less timber in the long run. And fewer plantations mean more reliance on imports, and potentially higher costs for builders and homeowners.

It’s a balancing act: climate, housing, jobs, and nature all pulling in different directions.

Coordinated Policy Is the Only Way Forward

If there's one key takeaway from the report, it's this: *we can't keep managing forestry in silos.*

Timber isn’t just about house frames. Forestry policy touches housing affordability, regional jobs, climate targets, biodiversity, and even carbon credit markets. And without coordination, we risk creating bigger problems down the line—like timber shortages, mill closures, job losses, or stranded investments.

Here’s what the report suggests needs to happen:

• Short-term solutions: Reliance on imports is unavoidable in the next few years. But 👉️ we need to manage this carefully so we’re not caught flat-footed by price hikes or overseas supply chain issues.
• Medium-term planning: Get serious about mill upgrades, softwood plantation expansion, and land-use planning so supply chains are better matched to regional demand.
• Long-term strategy: Support carbon forestry and biodiversity goals, but not at the expense of construction timber availability. Create incentives that balance preservation and production.

That means all levels of government need to work together, with industry, landowners and communities. Otherwise we'll keep flip-flopping between too much demand and too little supply.

The forestry sector isn’t just a resource industry anymore. It’s part of the solution to housing, climate change, regional inequality, and sustainable development.

But it can only play that role if governments plan for it.

Final Thoughts: What You Need to Know

So, what does all this mean if you're just trying to build a house?

• Softwood timber is the backbone of Australian home building—but supply is under pressure.
• Native hardwood is fading fast, and most of what’s left gets exported or chipped.
• Short-term timber shortages are likely, especially if you're building soon.
• Long-term solutions—like softwood plantations and mill upgrades—are in motion, but they take decades to deliver.
• Carbon credits and biodiversity goals are reshaping how we use forest land, for better or worse.

You don't need to know every detail about carbon credit pricing or sawmill productivity. But you should understand this:

👉 Timber is no longer cheap, infinite, or guaranteed to be local.
👉 Your building schedule and budget might depend on what happens in a forest—or a boardroom—hundreds of kilometres away.

That’s why it pays to ask the right questions:

• Where’s your timber coming from?
• What happens if there's a delay or a price jump?
• Is your builder sourcing responsibly—and realistically?

Because when supply gets tight, it’s the people building homes who feel it first.

FAQ

1. Why is there a timber shortage in Australia?
Because demand for new homes is peaking and our local softwood plantations and sawmills can’t keep up—especially in the short term. Native hardwood supply is also in steep decline.

2. What’s the difference between softwood and hardwood?
Softwood (like pine) is used for structural framing and is mostly grown in plantations. Hardwood (like spotted gum) is denser and often used for flooring or furniture, but most of it ends up as low-value exports like wood chips.

3. Are timber prices going to keep rising?
Possibly. Short-term shortages and more reliance on imports could keep prices high. Long-term trends depend on plantation investment and mill capacity.

4. What should I ask my builder about timber?
Ask where they source their timber, whether delays are expected, and whether their supply includes imported materials. It's better to know upfront than mid-build.

Further Reading

Timber Framing Guide | Key Elements & CodesLearn the fundamentals of timber framing for residential construction in Australia. In this guide we cover sub floor, wall, and roof elements, bracing systems, and building code references.Framing Timbers: Choosing Between 90x35 MGP & LVL timberChoosing the right framing material is crucial in construction. This detailed guide compares the 90x35 MGP framing timber and the LVL laminated veneer lumber, to help you make an informed decision. We discuss the properties, advantages, and potential drawbacks of each option.Complete Guide to Building a Timber Retaining WallThinking of building a timber retaining wall? Constructor’s comprehensive guide covers everything from choosing the right timber to design considerations and maintenance tips. Learn how to ensure your wall’s longevity and effectiveness. Don’t miss out on expert advice!Australia’s Timber Supply: Forecast to 2050Wondering whether timber will be available (or affordable) when you build? Learn what’s really going on in Australia’s timber supply—what’s growing, what’s shrinking, and how this impacts your home’s construction, materials, and long-term quality.Timber vs Steel: Choosing the Best Frame 4 Energy EfficiencyExplore the debate between timber and steel framing for energy-efficient homes. This article examines the insulation, thermal mass, and lifetime costs of both materials, helping homeowners make an informed decision for their dream home based on climate, longevity, and energy savings.C7 Timber Frame Checklist ExplainedLearn how the C7 Timber Frame Stage Inspection Checklist supports managing quality for the frame stage of construction. Understand technical terms, issues, and get an thorough understanding of how to manage quality for this stage of construction.