Master Builders Australia says its survey of more than 400 builders and contractors reveals that 2013 is unlikely to witness the industry lift from its current downturn.

The National Survey of Building and Construction shows industry conditions deteriorated in the December quarter. Builders reported a decrease in sales, profitability, and activity. With that, they expect to reduce their workforce in the period ahead.

Builders also reported becoming victims of a credit crunch, with 40 per cent of respondents concerned the availability of finance was having a major effect on their business.

Master Builders Australia Chief Economist Peter Jones said the survey results support calls for short term stimulus measures in conjunction with further interest rate cuts to help boost the industry.

“Interest rate cuts over the past year appear to have failed to boost the confidence of new home buyers.

“The Reserve Bank has pointed to the building industry to help boost the non-mining sectors of the economy, but this does not look likely unless macroeconomic policy becomes more accommodating.

“The most disturbing finding from this quarter’s survey is that builders’ profits are declining as the pipeline of work dwindles.

“The availability of credit is becoming a significant issue for builders and developers looking to invest in new building projects.

“The Government can no longer simply leave all the heavy lifting to the Reserve Bank. A short term increase in the first home owner’s grant for new houses and bringing forward of civil works, combined with rate cuts will go a long way towards restoring confidence,” Jones said.

 

But new home commencements on the rise

The survey findings release follows ABS Building Activity update for the September 2012 quarter which showed a two per cent lift in new home commencements, the second consecutive quarterly improvement.

“With 37,027 commencements, this is the strongest quarterly result in over a year and no doubt assisted by the 75 basis points cut from the official cash rate over May and June last year," said Housing Industry Association (HIA) Economist, Geordan Murray.

In seasonally adjusted terms the number of detached dwelling commencements increased by 4.3 per cent in the first quarter of the 2012/13 financial year, although remains slightly below (-1.4 per cent) the level of a year ago.

There was decline of 1.3 per cent in the number of multi-unit dwellings commenced in the quarter, but the level remains 5.1 per cent higher than the level recorded in the corresponding quarter a year ago.

"New South Wales posted an encouraging result with a 9.5 per cent increase in commencements in the quarter, although it is likely to be influenced by changes to government incentives that occurred around this time. The headline result was underpinned by a substantial 18.8 per cent lift in detached dwelling commencements as well as a 1.8 per cent lift in multi-unit commencements," said Murray.

In the other states, dwelling commencements (seasonally adjusted) increased in Victoria by 2.9 per cent and in Western Australia by 23.6 per cent. The number of commencements fell by 14.2 per cent in Queensland, 9.4 per cent in South Australia, 0.4 per cent in Tasmania, 29.9 per cent in the NT and 3.3 per cent in the ACT.
Rescheduling of the ABS's data releases means this is the first look at the dwelling commencements figures for the September 2012 quarter and is around a month later than previously.