Just days after the collapse of three building companies in New South Wales, a key industry figure has declared there are some positive signs on the horizon.
Graham Wolfe, the executive director of the NSW branch of the Housing Industry Association, says activity is increasing among first home buyers thanks to increases to the first home buyers’ grant and lower interest rates.
“We’ve got members out there who are seeing the listings on the books increasing, principally on the back of first home buyers. In fact we are starting to see that some of the investors are starting to sniff around.”
The turnaround is not before time. Around 29,700 dwellings were built in 2008 (including homes, apartments and multi-dwelling buildings), compared with 47,000 in 2001-02.
“There’s an argument that says that 47,000 was slightly too many, but there’s no argument that 27,900 is just too few,” Wolfe says. The HIA estimates the right number is between 38,000 and 42,000. “We have been under-building for a long time.”
Wolfe says while conditions remain tight and renovation builders are particularly struggling, there are some good signs that the credit freeze that has brought many companies unstuck could be thawing.
A number of builders are reporting banks are becoming more friendly and interest rates have even eased in recent months.
He believes a number of factors should continue to help increase demand, including further rate cuts, the Government’s stimulus package, and falling house prices.
“Six months ago, we didn’t have first home buyers, we didn’t have investors and the mums and dads were nervous. I think in another six or eight months they will be a little bit more comfortable about their situation from a jobs point of view,” Wolfe says.
“There are enough indicators to suggest that although we are not over problem, things are starting to look more positive.”
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
