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Top end steady despite GST

The GST boom in the housing market is not affecting the upper end of the market as much as the remainder says Atrium homes sales manager Rod Dawes.

As the value of a house goes up, the GST is having less of an influence

in bringing forward purchasing and building decisions.

Mr Dawes said, while project home builders were subject to the booms and busts of the market, the quality home sector experienced less fluctuation. Quality home builders still expect demand to be steady through next year.

However, many builders are wary of the future because they have seen it all before in the booms and busts of the early 1990s.

The absence of the extreme cycle has meant quality builders have had fewer demand-driven increases in price as is occurring in the main market.

Price increases still occur but these tend to be supply-driven. Both quality and project home builders are faced with growing labour and material costs as they compete for building supplies.

Artique homes director John Glory said, in terms of contractors, bricklayers were the most demanding and were enjoying the greatest pay increases.

Mr Glory said a year ago quality bricklayers were charging $700 per thousand bricks laid. They now receiving $1000 or $1 per brick laid.

Archicentre RAIA group manager WA Gerard Siero said some bricklayers were charging up to double what they had been receiving a year ago.

Mr Glory said the prices tradesmen were enjoying had brought many people out of the woodwork with people leaving their jobs and taking up a trade.

He said he had heard of situations in the market where builders were under so much pressure to fulfil jobs that they put anyone on.

As a result, he said, the quality often suffered.

The difference between project builders and quality builders is, Mr Glory explains, that quality builders attract quality labour by paying their contractors a higher price than they would receive in the mass market.

As a result, Mr Glory said that while 1999 had been a good year in terms of signing contracts, it had created other problems in terms of fulfiling the contracts on time and on budget.

Mr Dawes said he had heard of builders who were already going broke and other were likely to follow.

Other project builders were said to have inbuilt the GST increase into their prices and then advertised prices as GST-free.

Mr Glory said it was essential that builders factor in the price increases before they happen rather than wait until prices are increased.

Builders’ margins, rather than increasing because of the boom, are in many cases shrinking because builders get locked into a contract that either ignores or underestimates the supply price increases.

Charles Allia Homes estimator Linda Allia said quality of service was king in the quality home building market, with successful companies prepared to “bend over backwards” for the client.

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