Tougher conditions for residential builders during September quarter

“The latest National Survey of Building and Construction shows that residential building activity has entered more challenging waters,” according to Master Builders Australia’s Chief Economist Shane Garrett.

“The Activity Index for Residential Building fell to 55.0 points in the September 2018 quarter compared with 59.8 points in the previous three-month period,” he said.

“Looking forward, optimism has dimmed in the residential building sector with the Survey’s Expectations Index falling by 1.9 per cent during the September 2018 quarter. This suggests that those in the industry anticipate further weakening over the coming six months,” Shane Garrett said.

“Residential building is being hit by tighter finance availability as well as the softening of house prices in Sydney and Melbourne over the past year. These factors are likely to drag new home building lower over the next few years,” he said.

“It has always been a struggle to consistently deliver enough new homes to meet demand. This has resulted in house prices steadily outgrowing wages and incomes over many decades,” Shane Garrett said.

“Policy settings need to ensure that we can build enough new homes to accommodate a growing economy and a larger workforce,” he said.

“Newly-released modelling from Cadence Economics confirms that proposed restrictions on negative gearing and CGT would result in up to 42,000 fewer new homes being built over a five-year period – enough to house over 100,000 ordinary Australians,” Shane Garrett said.

“These latest Survey results show that residential building is already cooling. We don’t need to weigh it down even more,” Shane Garrett said.