There are more indications that consumer confidence is on the way back and home building sales should improve in coming months.  While the Reserve Bank did not cut interest rates this month it is likely that another cut is coming in August.  There are reasons to be optimistic that demand for new homes will improve as the year continues and into next year.

Unfortunately, increased consumer demand for new or renovated homes is not by itself a guarantee of better times for home builders or for their clients.  Recent experience has taught us all that increased demand for homes needs to be matched by increased supply of labour and materials to avoid delays and excessive cost increases.  The government's power to manage some ot these supply risks is limited and they cannot be necessarily blamed for all delays and material cost increases.

The government can however be blamed for labour shortages and their continued uncontrolled spending on infrastructure projects will continue to aggravate this growing problem.  The Commonwealth and state government's failure to take on rogue union activity and their expectation that builders for government funded projects will have unionized workforces also does not help.

Governments are also responsible for risks caused by their regulatory activities.  They can be blamed for increased costs and delays resulting from the introduction of poor or excessive regulations that add to the complexity of home building.  If governments genuinely want to increase the supply of new homes they need to be very careful about introducing new laws.  In Victoria we are already facing a barrage of new laws being implemented over the coming 18 months and it is now time for the government to let the industry have time to adjust without even more disruption.