Current at: 12 July 2006
Rising interest rates, land shortages, and a lack of urgency among home buyers is keeping the brakes on new home building in New South Wales .
Releasing the winter edition of the HIA Market Snapshot Report, Australia ’s peak building industry body, HIA, said that comments from New South Wales ’ new home builders confirm that a sustained recovery is some way off, with many expressing grave saadfears over another rate rise before the end of the year.
HIA’s New South Wales Executive Director, Mr Wayne Gersbach, said that land supply shortages and council delays and regulations were adding to the pain.
“Despite an encouraging level of optimism in other states, builders in New South Wales reported that business conditions have been extremely tough. One builder reported over a 50 per cent drop in sales and enquiries while others have been forced to operate at lower margins ” Mr Gersbach said.
For most in NSW, the outlook for the next six months looks set to remain much the same, provided there are no further interest rate rises, however some businesses have claimed that the next six months will be ‘survival mode’.
“The lack of activity has forced many business to significantly cut down the number of staff and trades people” Mr Gersbach said
“While the availability of land remains a problem for building activity of greater concern is the fact that land has become far too expensive.”
“Problems with council delays and excessive regulatory requirements were found to be widespread and smaller builders in regional areas have experienced significant increases in cost and delays as a result of the BASIX requirements.” Mr Gersbach said.
One NSW builder noted “The interest rate rise had a dampening effect. Conditions are expected to remain much the same as there is no reason to expect it to improve at this stage.”
Another NSW builder said (that) “In order for business conditions to improve there needs to be more affordable land releases and tax contributions need to be reduced.”
“Most buyers in the past six months have been second home buyers who are looking to trade up. Affordability remains a key issue for first home buyers in the NSW market.” Mr Gersbach said.
“Outside of the Sydney market there is no sense of alarm or heightened concern over housing conditions.”