Wait, home builders told

PROSPECTIVE home builders should wait until early 2001 before starting work, according to Hegney Property Valuations general manager Stewart Kestel He said labour costs, which accounted for about 45 per cent of the cost of building a new home, have been spiralling over the past year, forcing builders to increase prices.

“Because of the boom in new home building, the demand for trades in the industry has been very high and as a result, new building costs have risen sharply,” Mr Kestel said.

“For example, the cost of laying a brick for a new home rose from around $450 per 1,000 to around $1,200 over the past 18 months.”

Mr Kestel said building activity was peaking and would slump sharply early next year.

“The cost of labour will fall and new home builders should be able to pass on the savings to new home buyers in discounts and incentive schemes,” he said.

“Land prices should also become more competitive as land developers offer more incentives to attract new-home builders. There has been a significant slump in new land sales during the past four months.

“However, because the housing boom during 1999-2000 was much shorter than previous new housing booms, it is unlikely the slump in new home building will be as severe as previous cycles.”

A survey of the top 30 home building companies by supports the view of a slowdown in the next six months.

About 80 per cent of new-home builders expected market conditions to deteriorate slowly over the next six months.

A further 10 per cent expected market conditions to deteriorate rapidly.

“Land prices should also become more competitive as land developers offer more incentives to attract new home builders.”

– Stewart Kestel

Employment could also be under pressure with 90 per cent of employers saying they expected conditions to worsen over the next six months.

The most common reasons given were the impact of the GST and rising interest rates.

Ninety per cent of the top builders said market conditions were poor or very poor and all believed conditions would deteriorate or remain unchanged.

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