FOR the first time in eight years, homebuilder BGC has lost its grasp on the top ranking in the Housing Industry Association’s annual homebuilders report.
A lifeless first homebuyer sector resulted in BGC’s housing starts slumping from 4,392 in 2009-10 to 2,435 last financial year, leaving it in third position in the HIA-Colorbond steel ranking of the nation’s top 100 residential builders. It remains the biggest builder in Western Australia.
It’s the first time since 2002-03 that BGC has not been in pole position and reflects a 13 per cent fall in new home construction starts across Australia last financial year.
BGC pointed to the inactivity in the first homebuyers sector of the market to explain the sharp fall, and while the median house price in Perth has declined this has had little impact on the price of land.
The average budget for a first homebuyer in Western Australia is between $350,000 and $400,000, but before securing finance for this investment young buyers need to save a deposit of at least 5 per cent.
This creates a significant hurdle for many young people, a cohort industry insiders claim has done the sums and decided to stick with renting or living at home with their parents.
Despite its slide in the annual rankings, BGC Residential managing director Julian Ambrose said its forecast housing starts for this financial year would not lead to additional big declines.
“As builders we sell and then we start building and from sale to start it’s about six months,” Mr Ambrose told WA Business News.
“So we already know what the next six months are going to look like.
“It doesn’t look a lot better but it’s not going to go lower than this.”
BGC is not the only WA home builder to have slipped in the ratings; JWH Group fell from sixth to ninth position after its housing starts fell by 270 to 1,318 for 2010-11.
HIA chief economist Harley Dale said it was a travesty that WA had the strongest economy of all the states but the weakest homebuilding sector.
“It speaks volumes about how much needs to be done to make housing more affordable,” he said.
Mr Dale said a lot of the issues related to the timely release of land in WA as well as reform to the planning approvals processes.
“We recognise considerable progress has been made in the reform of planning but there are still unnecessary and costly delays,” he said.
“And we are still some way off any solutions to the taxation regime.”
Melbourne homebuilder Metricon Homes topped the HIA rankings this year, having suffered a decline of just 154 starts.
And the overall share of the market held by Australia’s top 100 builders also fell by 3 per cent, from 36 per cent to 33 per cent in 2010-11.
HIA WA executive director John Dastlik said consumer confidence and the rapid escalation of housing prices in the past decade were the major concerns in WA.
“The new homes market gets approximately 60 to 70 per cent of its clientele from those consumers in an existing home,” Mr Dastlik said.
“With the established market so quiet it’s having an impact on the new homebuilding market as well.
“The biggest issue for most people is not having that confidence to make that decision at present, in both sectors of the marketplace we think there are people out there circulating, looking and considering their options.
“But making that final decision is taking a longer period of time than in the past.”