No end in sight for building plight

PROPERTY News

The latest lending figures bring more bad news for the plight of housing in Queensland, says Master Builders, Queensland’s peak body for housing and construction.

Finance commitments for houses in Queensland (seasonally adjusted) fell by 1.2 per cent from 9171 in July to 9063 in August. Nationally there was a 1 per cent increase. Master Builder director of housing policy Paul Bidwell said the drop in demand was right across the board, including the construction and purchase of new dwellings as well as the purchase of established dwellings. The proportion of first-home buyers also fell again in August, and is now at just 13.7 per cent compared with the long-term average of around 20 per cent/
“Lending figures are an important indicator for the sector. We had hoped that the slide in finance commitments had bottomed in June/July and that things would improve as the year draws to a close, but despite all the wishing in the world this is more bad news for the housing construction sector,” he said.
“The figures clearly demonstrate that the Reserve Bank of Australia (RBA) made the right decision on interest rates last week. “Construction is a major contributor to Australia’s economy. It is responsible for more full time jobs than any other sector in Queensland.
“We have seen how six ‘quick fire’ rate rises from October 2009 to May 2010 dampened demand in the construction industry. Currently mortgage rates are close to the long-term average and all of the talk about further hikes is spooking home buyers.
“The RBA should not be looking to lift the cash rate until we see strong signs of improvement in the housing construction sector.”
The weak state of the industry is highlighted in the results of the latest Master Builders survey of industry conditions, which will be released in a report later this month. The report shows that the residential sector fell further in the September quarter with over half of the businesses surveyed reporting softer trading conditions, with turnover and profitability both down.
“Conditions in Queensland’s residential and commercial sectors are still well below satisfactory levels and are forecast to remain weak in the short-term,” Mr Bidwell said.