Market bounceback welcomed with a degree of caution

AFTER a long phase of pain for the building industry coming out the tail end of COVID, resulting in supply chain and labour pressures, the industry continues to take hits from significant hikes in material costs, cutting their margins substantially and sending some down the gurgler.

This struggle was then further impacted by new home buyers fleeing the home builder market spooked by the beginning of interest rate rises and market uncertainty.

Consequently, on the back of an interest rate turnaround, there has been a cautious welcome of the latest industry forecasts showing the Victorian building industry is showing signs of growth but still falling short of ambitious Australian building targets.

The latest national data compiled by Master Builders Australia (MBA), shows the nation is still 160,000 homes short of the National Housing Accord target for the next five years.

Victoria’s target has been set at 306,940 new homes, and will by MBA’s reckoning, fall short by more than 10,000 homes, equating to an underperformance of the target by 3.3 per cent.

However, Victoria fares significantly better than every other State and Territory, with the Northern Territory falling short by 69 per cent and other larger markets like New South Wales and South Australia forecast to miss the national target by 22.7 per cent and 20.3 per cent, respectively.

 

MBV chief executive officer Michaela Lihou said the latest forecast data was encouraging news for the Victorian building industry, but warned she remained cautious about the future impacts of two soon-to-be-introduced legislative changes.

“The forecast numbers are certainly a welcome step in the right direction, but we then have two major legislative reviews, which could impact the future direction of those forecasts.

“On one hand, we’re anticipating the potentially positive impacts of the Domestic Building Contracts Act review, which we hope will support both consumers and industry to enter into clearer and fairer contracts and be a green light to the industry to take on more projects.

“But then on the other hand, we will also have to deal with the impacts of the soon to be introduced new consumer protection Bill which we have argued is well intended, but flawed and unfairly – and in parts illogically – skewed against builders, which will be a red light to many in the industry considering taking on

new work.”

MBV cautions these baseline projections are good but not guaranteed, and further emphasises the Victorian building industry cannot afford to be caught in a “one step forward and then one step back” scenario.

“Clearly, we believe the Victorian government needs to think very carefully about the impacts of these legislative changes, if it wants to genuinely support the industry to reach the much-needed national and state building targets,” Ms Lihou said.