29/05/2007 - 22:00

Shortages no threat to bottom line

29/05/2007 - 22:00

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Labour and material shortages may be hurting some builders, but most in the industry are enjoying a period of above-average profits, according to a survey of Western Australia’s largest builders.

Shortages no threat to bottom line

Labour and material shortages may be hurting some builders, but most in the industry are enjoying a period of above-average profits, according to a survey of Western Australia’s largest builders.

Results from the March quarter survey of 62 major WA builders, undertaken by the Master Builders Association of WA and Bentley’s MRI, found the building industry had shown remarkable resilience in overcoming trading difficulties to record a strong result.

More than 92 per cent of builders reported average profits or above, compared with 79 per cent in the June quarter of 2006.

MBA WA housing director Gavan Forster said housing sales activity and display centre traffic remained satisfactory and some post-budget revival in the first home market was expected.

“The revival will be gradual as would-be buyers locked into fixed-term rentals will likely delay their purchasing decision until the expiry of their leasing agreements,” he said

Most builders surveyed believed the government’s new five-star plus water and energy regulations would have a smooth introduction from September, with some noting that around 40 per cent of buyers had already requested solar or gas boosted hot water systems.

However, the proposed mandatory requirements for grey-water systems or rainwater tanks as part of the initiative’s second stage are believed to be more problematic, with just 5 per cent of buyers currently requesting those items.

Mr Forster said most buyers considered rainwater tanks a great idea, but were reluctant to pay for them.

“It’s not just the cost of the tank itself, but the plumbing and installation costs which homebuyers will have to wear. There’s also the issue of tanks on small lots, where do you put them?”

Despite a number of upcoming challenges, Mr Forster said industry prospects remained positive, with more than 20,000 dwelling starts expected in 2007-08, the fifth successive year starts have exceeded this threshold level.

Housing construction cost increases would ease to between a modest five and 8 per cent over the period, he said.

WA’s largest home builder, BGC, is expecting a steady stream of new housing projects this year.

The company had 4,558 home starts during 2005-06 across its Homestyle, Commodore, BGC Australia, WA Housing Centre and National Homes brands.

General manager Gerry Forde said that, due to the overheated market last year, the company planned to be more cautious with sales this year, by not selling more than it could build.

“Demand for housing will remain strong in WA, but the biggest issue facing builders will be getting hold of more land,” Mr Forde said.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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