Scott Hutchinson says surplus demand is driving up costs, driving down profits in construction industry ABC Radio Brisbane / By Kenji Sato and Steve Austin Posted 3 hours ago https://www.abc.net.au/news/2024-03...mand-damaging-construction-industry/103627860 Scott Hutchinson says higher demand is counterintuitively causing profits to plummet. (ABC Radio Brisbane: Kenji Sato) In short: A Queensland building giant says surplus demand for construction is making companies go broke. Hutchinson Building lost 86 per cent of its net profits last financial year. What's next? Chairman Scott Hutchinson predicts more builders and companies will go bust in the near future. The head of one of the nation's largest builders says he was offered a billion dollars in housing construction jobs every month last financial year, yet his company's net profit collapsed 86 per cent. Hutchinson Builders chairman Scott Hutchinson said the glut of demand was paradoxically causing profits to fall and costs to rise. "It's counterintuitive, but as our turnover goes up our profit goes down," Mr Hutchinson said. "If you're a little formwork company and you have four good crews and you win eight jobs, you've got to spread your good crews over eight jobs and you're much less efficient. "A team gets good when they work together for a long time, and then all of a sudden in a boom they have to get spread out so there are inefficiencies caused by a boom." Mr Hutchinson said two years ago he took on a large number of fixed-price jobs, only for costs to increase 30 to 40 per cent due to efficiency losses and rising material costs. The chairman said he turned away around 80 per cent of jobs last year due to the pressures. He said attempts to blame the unions were a "red herring" since, in his view, the real problem lay in the surplus demand and the shortage of workers. Last year's annual report shows, despite the company's steep decline in profits, revenues actually increased 17 per cent from the previous financial year. Why affordable houses aren't being built Brisbane developer Don O'Rorke said Australia either needed to import skilled immigrants or drastically increase its trainee cohort to fix the labour shortages. The Consolidated Properties Group chairman said without government subsidies his business could not produce a two-bedroom apartment for less than a million dollars. "The construction costs are so high that that's forced the sale price up to a million dollars," he said. "That million dollars was $450,000 four years ago — that's how much the prices have increased." Mr O'Rorke said the only thing his business would be able to do without government subsidy was "premium apartments in premium locations for wealthy people". "Seventy per cent of our buyers have come from the western suburbs, they're owner-occupiers, they're downsizers, and they're baby boomers," he said. Premier Steven Miles says the first home owner grant was the better way to ease housing costs.(ABC News: Mark Leonardi) Queensland Premier Steven Miles told ABC Radio Brisbane the government had ruled out stamp duty cuts as a way to ease house prices. Mr Miles said the first home owner grant was the better way to ease housing costs without pushing prices up even higher. "The advice we had was that a more effective way to increase supply was to provide a first home owner grant to people buying a new home," he said. "By limiting it to new homes the price in the market should be affected less while incentivising builders to build new homes." Mr Hutchinson said several high-rise projects in Brisbane had stalled indefinitely because they were no longer feasible at current prices. He said many builders were waiting for the boom to subside or costs to fall before resuming those projects. He said there was no way of telling when that would be. Mr Hutchinson said he was fearful for the future of Australia's building sector. "A lot have collapsed and there's more to come," he said. "There's pressure on, we're seeing it every day, and the subcontractors are going broke too."
Australia's housing crisis has become a fierce political battle that could have major implications for the next federal election By Q+A and RN Breakfast host Patricia Karvelas Posted Yesterday https://www.abc.net.au/news/2024-03...tical-battle-federal-election-issue/103625554 The Albanese government stands in the middle of a fierce battle over housing that is set to shape the next election.(ABC: David Sciasci) A fierce battle over housing is set to intensify and define the next federal election as Labor, the Coalition and the Greens target a growing cohort of voters who believe they've been locked out of home ownership for life. The great Australian dream of owning your own home has been fading for a long time — there's nothing new about this. But the crisis is now baked in — and it has arguably become the big generational disrupter, changing votes and threatening to hurt the government at the next poll. The Greens have successfully put housing on the mainstream political radar. Now the Liberal Party — who are strategising about how they can become relevant and attractive to the younger voters they've been losing in swathes — are joining the debate after privately acknowledging they've been missing in action on this pivotal issue. In the middle stands the Albanese government. Burnt and scarred by their crazy-brave promise to reform negative gearing in 2019 — partly leading to them losing that election — they have been running from any suggestion that they might again look at contentious changes to tax on property ownership. Labor insiders privately acknowledge they are getting politically smashed on housing, with various solutions being floated internally to address it. There is also deep frustration that they are not getting adequate credit for the suite of policies they have already announced: There are 17 policies in total and $26 billion in new funding to address Australia's housing crisis. Labor has argued that the answer to this problem is supply, supply and more supply. But supply isn't materialising fast enough and migration numbers are putting further strain on the market. A massive headache for the government Some Labor insiders tell me they believe there needs to be a shake-up — even a reshuffle — to ensure the role of housing minister is held by one of their best communicators. Housing Minister Julie Collins has one of the lower public profiles in the government and has been out-manoeuvred by Greens housing spokesperson Max Chandler-Mather who has, to the constant irritation of the government, seized the territory on this lighting rod issue. Several of Collins's colleagues have described her as a solid minister; some also say she is having little cut-through where it matters most. But most concede the government needs to take collective responsibility for the housing crisis and debate — and the looming budget in May provides a key opportunity. Still, the reset on this issue will need to run deeper than communication. Housing Minister Julie Collins's colleagues have described her as a solid minister.(ABC News: Adam Kennedy) Labor has several housing policies — including its help-to-buy scheme designed to assist 10,000 homebuyers a year through shared equity. It is currently stuck in parliament because the Coalition and Greens aren't backing it. "We know we've got a lot of work to do," Collins told Sky News at the weekend. "Obviously having the Liberals voting against more housing in the parliament is very unhelpful, and what I would say to the Liberals is they should be supporting housing measures in the parliament instead of voting against them at every opportunity." This week the combination of high migration figures and news that new housing construction is falling behind schedule triggered a massive headache for the government and delivered and the opposition a strong attack line. The government is working with states and territories to meet the housing accord target of 1.2 million homes in five years, but the building industry is raising concerns about its capacity to deliver, with a construction worker shortage and state infrastructure projects hoovering up workers. While the government is offering state and local councils $3.5 billion to fast-track construction, some are worried that the target starting in a few months won't be met. Where's the Coalition? In Question Time, Shadow Treasurer Angus Taylor asked why Australia's adult population had increased by over 1 million people since the Albanese government had taken office, while home building completions were only a quarter of that figure. It cut deep. NDIS and Government Services Minister Bill Shorten — who is known for calling a spade a spade — said there was a "crisis out there" in how to balance immigration and housing. The government announced it would begin enforcing tougher visa rules for foreign students starting this weekend, with increased English language requirements for student and graduate visas. The government will also get the power to suspend education providers from recruiting international students if they repeatedly break rules. "The reality is, though, that there is a crisis out there in terms of how we make sure we balance immigration and housing," Shorten said. Andrew Bragg was announced as the shadow assistant minister for home ownership in Peter Dutton's March reshuffle. Coalition figures privately admit they've been too slow to respond to this issue. Given the housing crisis has become a barbecue-stopper conversation, it is surprising that the Coalition has taken so long to develop targeted policies to address it. They are now trying to sharpen their focus with Peter Dutton's announcement of Andrew Bragg as the shadow assistant minister for home ownership in the March reshuffle. Bragg has since floated the idea that home owners should be able to pay their super into their mortgage offset accounts — in an attempt to expand the Coalition's housing policy, announced by Scott Morrison in 2022, to allow first home buyers to use their super to purchase property. Bragg now says he will push for first home buyers to be able to withdraw more than the $50,000 proposed before the 2022 election. While he dismisses the criticism by some experts that this would only increase house prices, Liberals are not all convinced the policy has mainstream appeal, with some holding concerns about it being painted as a raid on young people's super — a claim they contest. Many believe the party needs to be looking for other policy responses.
Just watch The Killing Fields. It is a pretty scary movie. I like how Pol Pot is referred to as Brother Number 1. Khmer Rouge destroyed the intellectual class and set Cambodia back decades. Very sad. Its amazing no one tried killing that psychopath.
I wonder why in the US home builders are making tons of money but in Australia they are collapsing? I mean there is surplus demand in the US as well besides commercial real estate which is a disaster. $1 million for homes? There are home builders in the US selling for less than $500,000 in some areas (mainly open area states like Texas, New Mexico, etc.). Wow that stamp duty is out of control. I don't even know what it is. The US had it once but it ended in the late 19th century.
Australian house prices hit new high according to March PropTrack data Jessica Wang NCA NewsWire Mon, 1 April 2024 https://thewest.com.au/business/aus...-according-to-march-proptrack-data-c-14154778 Home prices across Australia have hit new highs, with the median value of a home in a capital city shooting to $832,000. Month-on-month, national home prices set new records, growing by 0.34 per cent. Dwelling prices in capital cities increased by 0.4 per cent, and are now 7.64 per cent above prices in March 2023, and a shocking 35.2 per cent higher than in March 2020. The figures, released on Monday in PropTrack’s Home Price Index report, found homes in all capital cities bar Hobart had increased in price since February. Home prices in Tasmania’s capital fell by a slight 0.03 per cent month-on-month, and have dropped by 1.65 per cent year-on-year however they were still up 36.1 per cent since pre-pandemic levels. Costs were rising the highest in smaller capital cities the quickest, with year-on-year growth in Perth, Adelaide, and Brisbane soaring by of 18.62 per cent, 13.47 per cent and 12.90 per cent respectively. PropTrack’s senior economist Eleanor Creagh said that while more homes had been listed in the first few months of 2024, sustained demand “has absorbed the surge”. “As was widely expected, the Reserve Bank kept the cash rate on hold at 4.35 per cent in March and many expect the next move for interest rates will be down, though timing remains uncertain,” he said. “The expectation that interest rates may begin to move lower in late 2024 will sustain buyer and seller confidence.” The median value of a home in Sydney ($1,069,000) is still considerably higher than the $832,000 average price of a home in other capital cities. In comparison, the median dwelling value of a home in Melbourne is $802,000, and $801,000 in Brisbane. While rising home prices in capital cities outpaced regional areas, regional home prices also peaked in March, increasing 0.19 per cent month-on-month. Year-to-date, the biggest regional increases have been on homes in Perth (18.62 per cent), Adelaide (13.47 per cent), and homes in South Australia outside of Adelaide (12.81 per cent). Ms Creagh said home prices will likely continue to increase throughout 2024. “Housing demand is also being buoyed by population growth, tight rental markets, resilient labour market conditions and home equity gains,” he said. “Meanwhile, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing. “The imbalance between supply and demand is likely to further offset the impact of affordability constraints and a slowing economy. As a result, prices are expected to remain on the rise in the months ahead.”
%% Good points + partial points. FOR that post only= %% looks to much like glasses. Sunglasses,I do wear more. NOT thru with DJT yet/good bid\ask spread of $00.20 Stamp duty?/ LOL .Amazing in USa, well its an election year; + the USPO[us post office] wisely delegated most all the packages to UPS/private sector; USPO already working with FDX $20 type union\commie style minimum wage making CA more poor
House prices continue to rise as number of landlords increase By business reporter Nadia Daly Yesterday at 7:44am https://www.abc.net.au/news/2024-04...ise-as-number-of-landlords-increase/103654522 National housing data is being skewed by more affordable segments of market. While buying a home to live in remains out of reach for many Australians, investors are flooding back into the housing market. Data from the Australian Bureau of Statistics shows lending to investors — otherwise known as landlords — has jumped almost 20 per cent in the past year. Almost four in 10 people taking out a mortgage now are landlords. The combination of rising house prices, rising population growth (due to migration), rising rental demand and slower housing construction has made housing investment a more attractive proposition, according to economist Rachel ViforJ. "If we've got huge demand relative to supply that would normally push up rents. And that would be an incentive for investors to invest in rental housing," Professor ViforJ told the ABC. The ABC visited an open house last week hosted by Adelaide real estate agent Aditya Singh. Mr Singh said he had noticed an uptick in investors buying to rent or short-term lease (like Airbnb) had increased over the past year. "At the last two months of open houses, we've had lots of investors," he said. Adelaide real estate agent Aditya Singh has noticed an increase of investors at open houses in recent months.(ABC News: Morsal Haidari) Meanwhile, housing data from CoreLogic shows prices in capital cities continue to rise — up 0.6 per cent in March and up 10.2 per cent since January of 2023 when prices began to rise again after a short slump. CoreLogic's Tim Lawless said there had been 14-months of consistent growth. "Despite very high interest rates and a cost of living crisis, we've been seeing housing values rising ever since, albeit at a slower rate of growth," Mr Lawless said. In practical terms that means a house valued at $800,000 in January 2023 that increased by 10.2 per cent would now be worth $881,600. All the while rents have continued to climb, largely due to those low vacancy rates which are the result of a post-COVID boost in migration over the past year. CoreLogic chief analyst Tim Lawless said increased investor involvement could help ease the housing crisis.(ABC News: Geoff Kemp) Mr Lawless suggested the increase in investors could potentially help to ease the rental crisis. "Arguably more investment in the marketplace is a positive thing. Hopefully that is introducing more rental stock to the marketplace." Though he noted: "Obviously, if investors are purchasing established stock off other investors, it doesn't necessarily add to overall rental stock." Professor Rachel Viforj said young people looking to get into the housing market have a financial mountain to climb.(ABC News: Mark Leonardi) Rachel ViforJ, a professor of economics at Curtin University is more blunt: the state of housing affordability is a "really, really massive problem … whether you're looking at the homeownership market or you're looking at the rental market". "If a young person is looking to buy today, that young person will be facing much higher house prices than say 10 or 20 years ago and also facing much higher interest rates than several years ago," she said. "The median house price in Sydney is now well over $1 million, and unfortunately, people's income levels are just not keeping up with house price growth." The cause is widely agreed to be one of supply and demand. "On the supply side, we've had historically low levels of building approvals and so we've also had labour market shortages as well in the construction industry," Professor ViforJ said. "And on the other hand, we've actually got huge demand for housing, in the form of a large number of migrants who have come in over the last year." Would-be-buyers are faced with stiff competition in their quest to purchase a property.(ABC News: Ethan Rix) Tension between generations becomes an unintended consequence The housing affordability crisis is having unintended consequences between generations, Professor ViforJ said. "There's definitely growing intergenerational tension in the housing market. "Most people who are home owners are older and many of them would have bought back in say the 1980s, or the 1990s, just before the worldwide housing boom." "If you bought just before the housing boom, then you would be enjoying a huge amount of capital gain," said Professor ViforJ. "Unfortunately, what that means is that it's actually locking out growing numbers of young people from being able to access first home ownership." The divide was not just between generations but between classes, she said. "if you're a young person, but you have access to the bank of mum and dad, you'll actually find it easier to be able to buy your first home" That was the case for 25-year-old bartender Connor Roche-West who just purchased his first apartment in Sydney's lower north shore this past weekend. Sydney apartment buyer Connor Roche-West and his partner, who asked not to be named.(ABC News: Ethan Rix) Mr Roche-West was thrilled when he spoke to the ABC after the auction. He said it had been a long hard journey to buy a property in the current market where he was often outbid by other buyers, some of whom he believed may have been investors. "It's rough knowing it's going to be back on the market in a couple of weeks for renting, but it is what it is, there's not much you can do" he said. He said he was able to purchase the apartment with some financial help from his parents which he said he was very grateful for. The unfortunate reality was that it was "damn near impossible" for young people like him to get into the housing market without such monetary support, Mr Roche-West said. 'I think most politicians will be quite cautious' Real estate agent Ajay Valanju and property officer Scott He. (ABC News: Ethan Rix) Real estate agent Ajay Valanju who sold the apartment to Mr Roche-West said he had noticed an increase of investors since the start of this year. "Last year it was mainly owner-occupiers who were active but now we're seeing investors coming back into the marketplace." The tension at some auctions between different bidders is sometimes palpable. "It's definitely the case that when you have large numbers of investors wanting to purchase properties, as well as large numbers of first home buyers wanting to purchase properties, that there will be intense competition for the limited supply of housing that's in the market," Professor ViforJ said. "And of course, with rental investors, typically, they're on higher incomes than first home buyers, typically they have more equity behind them, and therefore more financially well off." The Commonwealth Bank's own data shows most of those with investor home loans are comfortably earning six figures.(Supplied: Commonwealth Bank of Australia) Aside from the generational divide referenced by Professor ViforJ, the other reason property investors can be an uncomfortable topic when it comes to housing affordability is that they often can price out younger buyers because of tax incentives. One of those tax incentives is negative gearing, which essentially means any losses a housing investor makes on the shortfall between rent and interest will be offset against other income — and covered by the taxpayer. Although touching negative gearing was not very politically palatable, Mr Lawless said there were some ways to scale it back if any politician is game to try. "Speaking from a more personal perspective, I think there is room to change negative gearing policies, perhaps capping it at two properties or less than three properties, or capping the total amount that you can negative gear will be much more palatable to voters." Mr Lawless said this may help to reduce the number of investors who have "a significant stable of investment properties that have treated it much more like an investment class than the housing asset itself." Another possible tax reform would be adjusting capital gains tax concessions which allows investors who hold a property for more than two years to get a 50 per cent concession on that tax when they sell it. Removing that might disincentivise investment in the property market, Tim Lawless said. Though like negative gearing, tinkering with capital gains tax hasn't proven a very popular political pursuit. "The Labor government did have a policy of changing negative gearing policies and capital gains tax concessions, and they seemed to lose from an unlosable position. So I think most politicians will be quite cautious in adjusting these types of policies," Mr Lawless said. Professor ViforJ said another approach could be winding back stamp duty, which is the tax someone pays when they purchase a house. Instead, she proposed replacing it with something like an annual land tax "that is not an up-front cost that people have to pay upon purchase, but it's an annual tax that they actually pay on the value of the land year after year after year, but not in a lump sum." Tax reform isn't the only option: experts Aside from tax reform, the supply of housing clearly needed to be increased to meet demand, Professor ViforJ said, however that needed to include sufficient social housing. "We do need to build new properties across the income and wealth distribution," she said. "But we do need to make sure that we have a focus as well on people who are at the bottom end of the distribution, we're finding it difficult to access housing." Tinkering with negative gearing or the capital gains tax hasn’t proven a very popular political pursuit.(ABC News: John Gunn) "The supply of social housing has not kept up with the demand for it over a very long period of time now, which means that we are actually getting larger numbers of people who are slipping into homelessness." Professor ViforJ said there were many options on the table to improve housing affordability and the reality was many of them would need to be used together as there was no silver bullet solution. Mr Lawless said other shorter-term solutions included government grants such as the boost to the first home owners grant after the global financial crisis, which led to a surge in house sales. "But as soon as that stimulus was removed, we saw our first home buyer activity fall to below what it was pre stimulus. So I think that there's a really good argument here that those sort of policy initiatives, those stimulus levels don't really do a great deal for home ownership in the long run, and arguably pushes prices higher." Instead, Mr Lawless believes the problem is best tackled by increasing housing supply. As for the outlook for the year ahead, Mr Lawless believed the numbers are only going to go up. "I think the outlook for the housing market is it probably is further growth through the rest of this year and into next year. And arguably, if we did see interest rates coming down later this year, that could add a little bit more exuberance to housing activity." While Mr Lawless doesn't believe the number of housing investors will rise this year, Professor Viforj believes it might. "I think that as long as the rental vacancy rates are remaining, so low below 1 per cent, we will continue to see the amount of housing investment rise over the coming year. And I think that would especially be the case if interest rates start to fall."
The lazy and deciptful government continues to attempt to hoodwink the public by demanding that building more houses will solve the problem. Absolute nonsense and lies! The lazy govemnent wants someone else to fix the problem, "Builders to build more". Does the government lift a finger to eliminate govt. stamp duty and other taxes? NO! Does the government lift a finger to stop landlords ripping off the public? NO! Does the govenment lift a finger to stop taxpayers subsidising landlords? NO! Does the government lift a finger to stop landlord preferential treatment, eg 6 monthly rent increases? NO! Does the govenment lift a finger to stop public housing real estate be a business casino, house flipping bullshit industry? NO! Does the goverment lift a finger to stop landlords taking over housing? NO! Does the govenment lift a finger to ensure politicians don't have a business conflict of interest (egoism) where they stand to personally gain from price increases? NO! Are governments afraid if they lift a finger, they'll lose the votes of big business and landlords? YES! You can build a billion more houses and landlords will continue to snap them up as soon as they enter the market, outbidding home buyers. Building more houses doesn't fix a lazy govenment self interest problem.