THE new home construction industry remains buoyant and hopes are high for strong activity levels in 2003.
THE new home construction industry remains buoyant and hopes are high for strong activity levels in 2003.
A survey called Building Industry Business Conditions conducted by the Master Builders Association and accounting firm Bentleys MRI reveals that the industry is reaping the benefits of a strong trade-up buyers’ market and stable new housing costs.
MBA director of housing Gavan Forster said rapid growth in established house prices had pushed many buyers into the more competitive market of new construction.
Mr Forster said that despite the slow down of first-home buyers, second and third-home buyers were becoming a strong market. He said that market favoured two-storey homes, often on smaller blocks and ensured solid building activity throughout 2003.
“Overall the positives outweigh the negatives and there is no evidence that the building industry is slowing down,” Mr Forster said.
He said he expected a war with Iraq to put a temporary damper on the industry but that there was enough work in the pipeline to keep the industry going for another nine months.
“Traditionally with any event of uncertainty the effect is a wait and see approach but this is usually a temporary thing,” Mr Forster said.
“At the end of the day housing is a necessity of life that people just defer they don’t cancel.”
The survey shows that commercial builders have stronger expectations for improved trading in 2003, however, despite an increase in the tender market indicating higher work availability, profit margins remain low.
There was also an expectation that the “construction bubble” in 2003 could start to deflate if the new round of wage agreements became wide-spread.
“There is a lot of resistance to the wage agreements, particularly in the second-tier contractors who are concerned they will add to industry cost pressures,” Mr Forster said.
The New Energy Efficiency Provisions of the Building Code of Australia, to be introduced in July 2003, will add about $2,000 to the cost of a new home, the survey found.
Work pressure in the Mandurah region was significant, the growth spurt being supported by the availability of affordable land, seaside living and the prospect of improved transport infrastructure.
Mr Forster said that despite labour shortages and delays in material supply, which are classic symptoms of a building boom, the industry was coping well and operating within capacity.
Employment demand in the housing industry has accelerated since mid 2002 representing an increase of 128 per cent when compared with the six months to February 2002.
Shortages are evident in all major construction trades including bricklaying, plastering, roof carpentry and tiling.
