Very good article, if accurate. Stamp taxes, negative gearing allowances & other tax incentives all for the boomers. I guess in the end the homeowner class out votes the rental class just like here in the US & Canada. I thought things would get better after Morrison got booted but that was too hopeful. Even if Biden or Trudeau lose it won't change in the US or Canada either. One thing the article didn't seem to cover is why the investors came back vs. 2023. It is probably the booming Australian stock market. The problem is higher rates won't solve the problem either.
That is the most salient point. Politicians are just too weak willed to go against the grain. In the end you need a financial collapse for any real change to occur like the GFC or a banking collapse like what occurred in 1929-1932. Only then can Progressives come in and create a better society.
No end to the 'property cyclone' as construction costs keep rising and more builders head into insolvency By business reporter Nassim Khadem Posted 2 hours ago Xuan Tri Mai and Alyssa Luc say they are fighting to fix alleged defects in their newly-built home. (ABC News: John Gunn) Alyssa Luc and her partner Xuan Tri Mai are among many Australians who wish they hadn't rushed into building a home. It was the end of 2020 when the couple purchased a block of land in Catherine Field, a growth area suburb south-west of Sydney. Their block cost about $500,000, and they spent another $700,000 to enter a contract with what they thought was a reputable volume builder. The couple moved into their new home in July 2023 and, just days in, Ms Luc says they started finding alleged defects, starting with a blockage in their toilet. "If anyone would like to go build a new house, please think carefully," Ms Luc warns. "Think about the economy … think about the builders at the moment. "I mean, they [people] can see that so many builders [have] collapsed in the past few years. They should know now that the industry is vulnerable." It was supposed to be the end of what building industry pundits have labelled as a "property cyclone". But even if the eye of that cyclone has passed, savage storms continue to wreak havoc on Australia's $270 billion construction sector. Each month across Australia, on average more than 200 building and construction companies go under.(ABC News: John Gunn) Each month across Australia, on average more than 200 building and construction companies go under. The building industry is still reeling from one of its most tumultuous periods in history — a loss-making boom that eventuated soon after the pandemic. Consumers — lured with tens of thousands of dollars of grants under the controversial HomeBuilder scheme — were sold on fixed-price contracts that builders then struggled to honour as the cost of building materials and labour soared. The effects of that are still playing out. Call to better protect subcontractors and consumers Statistics from corporate watchdog ASIC show that for the current financial year so far, to March 17, there have been 1,987 insolvencies in the building industry. This is up from 1,495 a year earlier and just 782 in 2022. More horror stories are emerging of subcontractors and suppliers waiting to get paid but at risk of never seeing a cent, and consumers left with half-built homes or major defects. "With the [Home Builder grant] stimulation, we went from a very low point to boom time, and we weren't ready for that big upswing," says industry veteran and the founder and director of Satterley Property Group, Nigel Satterley. Nigel Satterley says consumers need to be better protected. (ABC News: Jack Stevenson.) The Perth developer has worked in the industry for more than 50 years, including advising governments on housing policies, and sees better times ahead. "We have moved out of the cyclone — I really believe the worst is over." But while consumers are back making enquiries about building a home, Australia's volume builders warn many remain nervous about signing on the dotted line. They say consumers are holding back both because of high-interest rates and cost-of-living increases, as well as fears they might end up with a dodgy product or a builder that's at imminent risk of collapse. Mr Satterley is calling for a fundamental rethink of laws regulating the industry so that subcontractors and consumers are better protected. "We need a lot more corporate regulation around directors that trade — the building companies — that know they can't pay the bills, or they're insolvent," Mr Satterley says. "For example, you could start 'John Smith Homes' with working capital of $200,000, and be building 500 homes a year, because these are what we call capital-light businesses that run on cashflow. And when the cash flow stops, they go bust." Some builders are asking customers up-front for deposits of 5 per cent or more. Mr Satterley suggests these be placed into a regulated trust account, which already happens in the case of developers, but usually not with builders. "If you [the builder] takes money from the trust account, you go to jail," he says. "I think these types of regulations need to be [implemented] across the home building industry." Another issue politicians constantly raise with him is how to better protect subcontractors in the industry. "I think there should be serious regulation [if a contractor] is not paid," Mr Satterley suggests. "Our industry pays on the 15th and the 30th, generally of the month, so give a couple of days, if they're not paid, they should be able to lodge an immediate complaint for protection." He also believes governments should do more to help build the pipeline of skilled workers needed to meet greater housing demand over the next few years. 'It's been very stressful' Ms Luc agrees there are not enough consumer protections and, to try to get a resolution, they've had to use the legal system. Her main concern, especially while she's been pregnant, has been finding traces of silica dust throughout her home. Alyssa Luc says she's been through a great deal of stress building a home. (ABC News: John Gunn) Silica dust can be toxic. It's commonly used to make products across the home, especially for stone benchtops in kitchens and bathrooms. Safe Work Australia says that when workers cut, drill or grind products that contain silica, dust particles are generated that are small enough to lodge deep in the lungs and cause serious illness or disease. It's been such a big issue impacting workers in the industry that, at the end of last year, Australia became the first country in the world to ban the use of engineered stone following a surge in workers developing lung disease silicosis. Ms Luc says they had an expert do a report for them that suggests that traces of the dust they have been finding throughout their home may be dangerous to their health. "We did ask them [the building company] to come out immediately because of health concerns — and so far, we've only had people come out to do cleaning," she says. Ms Luc says there are also other alleged defects around the home, and she's lodged a complaint against the building company that will be heard by a tribunal. "[It's been] very stressful — it took a lot out of me. It takes a lot out of both of us. Mentally I try to be strong for myself, for the family and my baby." Fears of a 'catastrophic failure' Even for those who don't build, but buy off the plan or opt for homes that have been recently built, significant problems have emerged. Toplace was once one of Australia's largest privately owned development and construction companies, which claimed to have built 30,000 properties across Sydney. But the developer went into administration in July 2023, owing hundreds of millions to creditors, and its founder Jean Nassif went overseas despite being wanted on fraud-related charges. The owner and founding director of the Toplace Group building licence was suspended for 10 years in 2023 by NSW Fair Trading and Toplace's licence was permanently revoked. IT worker Patrick Quintal says his life has been destroyed by buying into one of Toplace's troubled developments – Vicinity Apartments in Canterbury, in Sydney's inner south-west. Patrick Quintal says buying off the plan or newly-constructed homes is like "playing Russian roulette". (ABC News: John Gunn ) When asked if people should buy off-the-plan or newly-built apartments, he says: "Don't. Just don't do it, you are playing Russian roulette with your life basically. "In fact, I think you might actually have better odds playing Russian roulette than this. "It is crazy how poorly the government is ensuring people can actually safely buy property. You're expected to be a lawyer, the building engineer, all of that on top of your nine-to-five job. It's draining." Mr Quintal purchased a unit with his wife in May 2021 for $600,000 but now may be up for hundreds of thousands of dollars more to fix serious defects. Within months of moving in Mr Quintal had an engineer do an expert report, which he says described the entire building as a "death trap". A report from the NSW Building Commissioner identified major issues with the slab and beams in the basement of Vicinity Apartments. Jean Nassif is the owner and founding director of the Toplace Group whose building licence was suspended for 10 years in 2023 by NSW Fair Trading and his company Toplace's licence was permanently revoked.(Supplied) Mr Quintal says the entire building is now being held up by temporary steel structures and worries with increased building activity around the area — including a metro station – the whole structure could one day collapse. "It's not really safe," Mr Quintal says. "The building as it stands, could not support any kind of movement that was similar to a seismic activity. [It could mean] catastrophic failure … resulting in the building basically collapsing." Mr Quintal is still fighting for the council or government to pay the cost of fixing the defects, but in the meantime says he's financially and emotionally devastated. The Department of Fair Trading has estimated the total cost of the repairs to be about $50 million. With 276 units, that means owners like Mr Quintal are looking at a cost of at least $180,000 each, but possibly more as construction costs remain elevated and time drags on. At the same time, he says quarterly strata levies have jumped from $900 a month to about $4,000. "For me, the financials are quite, quite dire," Mr Quintal says. "We were planning on having a family shortly after we got the place. And I feel like I've just been in such a mental rut that I don't think I could afford to have kids, or whether I'm even mentally ready to have kids simply because I have to deal with the stress of this building, day-in day-out." Patrick Quintal wants the state government to step in and fix the problems. (ABC News: John Gunn) Mr Quintal says the onus shouldn't be on the owners to fix defects that weren't of their doing. He also wants the law changed to better protect consumers. "My hope is that the government will come in and take responsibility for basically the issues that they've created," he says. "It's not just this building. It's many apartments that we've seen over the last couple of years … They've all got similar problems." New home builds in decline as the cost of building rises The quality of building is one issue that's kept consumers wary of taking the leap into building. The soaring cost of building is another. Metricon chief executive Brad Duggan says the builder is still working through a pipeline of post-pandemic boom loss-making jobs, but when it comes to getting people to commit to new home builds, now things are much tougher. In 2022, Metricon was in financial crisis talks but was thrown a lifeline from its financier the Commonwealth Bank, which kept it from facing the same fate as many other builders. Mr Duggan says there's been a 40 per cent increase in enquiries from would-be buyers this year but that a "lack of confidence" is holding people back from signing a contract. "There's such pent-up demand [but] people don't want to take that step [of signing the contract]," Mr Duggan says. "It [the fear to sign a contract] comes from two places, one lack of confidence about the affordability, and also a lack of confidence in building." Brad Duggan says the price of building a new home will increase because of new regulations. (ABC News: Nassim Khadem) Mr Duggan hopes the RBA will soon signal when they will be cutting interest rates so that more would-be buyers will take the leap into building. However, he also warns that building costs could go even higher now that changes to the National Construction Code, designed to make more homes energy-efficient and accessible, have taken force. New requirements under the code include increasing minimum energy-efficiency standards for new houses and apartments from six to seven-star ratings, and more stringent accessibility standards, including step-free entry to dwellings, a toilet on the entry level, accessible doorways, and reinforced bathroom walls. The Housing Industry Association says these changes could increase the cost of building by about $20,000 to $25,000, depending on the type of build. Metricon says enquiries are up but people are scared to sign contracts. (ABC News: Che Chorley ) While Metricon generally supports the new NCC requirements, Mr Duggan questions "whether it's the right time to be looking at it now", while there's a housing affordability crisis. "It won't be an insignificant [price] increase. "I think there'll be a number of builders that may not be able to go to market because they don't have NCC compliant homes, which may mean that there is a lack of supply for the market, which could have some impact (on supply)." Not enough workers to build 1.2 million homes Australian Bureau of Statistics (ABS) data shows Australia's record level of immigration is easily outpacing new construction. The ABS will release its latest building approvals data later on Thursday, but last month reported that total dwellings approved fell 1 per cent to 12,850. In the 12 months to January 2024, total approvals for private sector houses were below 100,000 for the first time since 2013. As demand for housing increases, the industry warns there are just not enough workers to build the 1.2 million homes (about 240,000 dwellings a year) the Albanese government wants to see built over the next five years. There are industry estimates this target requires an increase in the building trades workforce of 90,000 people, but Mr Satterley believes it might be even more. "Australia can only complete, annually, around 130,000 dwellings per annum, maybe just a few more," says Mr Satterley. "What the prime minister is saying he wants is 200,000 completions a year, that is impossible to do. "We would need somewhere in the order of 400,000 qualified tradesmen this calendar year, and next year." But as baby boomers leave the industry, there are fewer young people coming in to learn trades. Data from Master Builders suggests that over the year to September 2023, a total of 42,333 new apprentices started in the building and construction industry — this represents a 25 per cent reduction on the previous 12-month period. As baby boomers leave the industry, there's fewer young people coming in to learn trades.(ABC News: Chris Gillette) "This country is being held back through not enough people to do the work," Mr Satterley argues. "And what we're seeing is the tradespeople are making more money and working less. So production is slower because the tradies are working less hours for more money." Will more builders go under and job losses rise? Insolvencies in the building and construction industry are predicted to continue to spike over the coming months and overtake pre-COVID highs and possibly even top post-global financial crisis highs. That will mean more job losses. HIA's managing director Jocelyn Martin says she feels for those consumers who are left with those half-built projects when builders collapse, but it's been hard for builders to manage cash flow. "There are no winners out of the insolvency situation," Ms Martin says. Jocelyn Martin says new regulations should lift the quality of building. (ABC News: Adam Kennedy ) "One of the biggest challenges we have in the industry is working with fixed price contracts — where the builders have had to lock in price for their customers, well in advance of supply of supplies, and then supply prices have increased." She hopes there will be fewer horror stories going forward, noting that there are already "changes happening" in the way the building industry is regulated. "I think there is an improved regulatory system," she says. "There are certainly more detailed inspections around properties. There is much education for builders, in terms of repercussions for builders that have gone broke or into administration." The building and construction industry remains one of Australia's largest employers, employing roughly 1.3 million Australians. And, despite the calls for more workers in the sector, there have already been job losses off the back of failed building companies. Others have had to take pre-emptive action and announce redundancies. It was almost one year ago when Simonds Homes boss Rhett Simonds had to make the tough decision to cut 10 per cent of the company's workforce. "You're going through and you're adjusting to economic environments, those hard calls have to be made," Mr Simonds tells ABC News. Rhett Simonds says the company's decision to cut costs has paid off.(ABC News: Nassim Khadem) The family-run builder's decision to cut costs has paid off. Simonds Homes, which is now listed on the ASX, earlier this year delivered a $100,000 quarterly profit, its first step into the black in two years. "Let's not deny it has it's been a tough period for the industry for the last probably two to three years," Mr Simonds says. "We are coming through the other side of what has been … a shaky couple of years in the industry. "As we start to see the stabilisation of interest rates and ultimately, hopefully, down the track, some small decreases in interest rates, that's definitely going to play a major factor in consumer confidence." Mr Simonds hopes the industry will be given support, including enough skilled tradesmen, to build the homes needed. "We do have a housing shortage and that is something that will continue to be a challenge for our economy and our country," Mr Simonds says.
Young couple with parents in tow nab pint-sized $1.66m Newtown house By Sarah Webb April 6, 2024 https://www.smh.com.au/property/new...ized-1-66m-newtown-house-20240406-p5fhuw.html A fierce battle of the first home buyers led to a young Sydney couple forking out $1.66 million for a pint-sized Newtown house on Saturday as agents across the city reported a drought of investors. While seven registered bidders fronted up to the auction of the quaint two-bedroom house at 92 Angel Street, it was two active first home buyers who duelled for the keys, and the winning couple paid $60,000 over the reserve. It was one of 908 auctions scheduled in Sydney on Saturday. By evening, Domain Group recorded a preliminary auction clearance rate of 67.6 per cent from 549 reported results, while 125 auctions were withdrawn. Withdrawn auctions are counted as unsold properties when calculating the clearance rate. Through the help of a buyer’s agent the underbidder threw down a strong opening bid of $1.59 million in a move that Ray White lead agent Moira Verheijen said instantly crushed most of the competition. The property had a guide of $1.4 million. “I saw a lot of faces fall at that point and I thought, ‘Where is this going to go?’ ” she said. It was at that point that Verheijen said a couple of council garbage collectors trundled into the street, forcing auctioneer James Keenan to pause while allowing the eventual buyers to collect themselves and lob a strong bid back. The winning bidders once the hammer fell.Credit: Dion Georgopoulos “They then took it to $1.6 million straight away and from there it went up in $10,000 increments. It was quite beautiful as this young couple had been looking for over six months and they had their Mum and Dad on both sides there, so it was a big family affair,” she said. “Despite such a strong opening bid, they were determined not to miss out this time.” Verheijen said just one investor fronted up to the auction as first home buyers continued to dominate the entry-level market. “I, personally, think this is because there are some good salaries out there and kids are staying at home longer so they can put more away,” she said. The Newtown home used to be an investment property.Credit: Dion Georgopoulos “And for first home buyers who can afford it, we’re starting to see more using buyer’s agents, too, because it’s getting harder, and they keep missing out.” The Newtown home was previously an investment property that last transacted eight years ago. Verheijen said it was the home’s location, light and potential that sparked the result. In Leichardt, the lure of daily croissants and coffee from a nearby hot new bakery helped a three-bedroom, two-bathroom Federation classic at 119 Moore Street not only fetch a reserve-smashing $2.33 million but make its vendors an almost $1 million profit. Selling agent Alex Mastoris, of CobdenHayson Annandale, said that, despite the home being originally marketed with a price guide of $1.8 million, sheer buyer interest fuelled by the opening of nearby Son of a Baker allowed them to raise the guide just days out from the event with feedback indicating the home would fetch $2.1 million. He said the home’s cracking location near parks and shops also spurred the interest. “We told the sellers it should crack the $2 million so we set the reserve at $2.2 million. We had seven registered bidders and five were active and they were a real mix of first home buyers, downsizers and upsizers,” Mastoris said. “I think that’s because it presented exceptionally well and location wise you were [in] walking distance to everything including the bakery that just opened up … that in itself generated a bit of a buzz.” Mastoris said bidding opened at $1.8 million from a woman looking to downsize and rose in $25,000 increments until it slowly hit the $2.2 million mark. “It then came down to two bidders; one was a first home buyer and the other an upsizer and it was slowly competitive until the upsizer got it. They’re expecting a baby in the next few weeks, and they just managed to muscle out the first home buyer by $10,000,” he said. “I actually sold the home to the vendors in 2019 for $1.76 million and it was right before the boom, so they were really stoked – that’s good money.” Over at 123 Reservoir Street in Surry Hills, a three-level converted warehouse sold for almost half a million dollars over the reserve after a pair of upsizers from Wollongong muscled out a Chinese investor to seal the deal. The pair paid $3.445 million for the four-bedroom, three-bathroom home, which last sold in 2018 for $2.7 million. Selling agent Charles Touma, of Ray White Touma Group, said that, despite an attempted low-ball bid of $2.5 million, bidding officially kicked off at $3 million and quickly sailed past the reserve, which he would only say was just over $3 million. While six registered bidders fronted up to the 9am auction, he said five were active and it was mainly between the underbidder and the buyer, who answered every offer with an aggressive counter. “One bidder would throw down a $25,000 but then the eventual buyers would offer up $75,000 on top that. But when we reached $3.3 million, it was in dribs and drabs,” Touma said. “I also had a guy from Melbourne bidding on the phone who was looking to buy for his kids, a couple from Balmain and another investor … this one was highly sought [after] and it had a great mix of buyers thanks to the industrial warehouse vibe. “It had high ceilings and exposed brick and exposed piping and also development potential.” Touma said some buyers were beginning to pull back despite a strong start to the year. Across at 49 Ross Street, in Epping, a four-bedroom, two-bathroom classic brick home sold for $2.768,000 in post-auction negotiations after two bidders battled it out until the home was passed in at $2.6 million. A local family was then able to secure the home, paying just over the $2.75 million reserve. “It was actually very sweet as they had come from a townhouse and they had their little girl there who was just so excited to get a house and told us, ‘I can now have sleepovers,’ ” selling agent Catherine Murphy, of The Agency North, said. She said it was the buyers who kicked off bidding at $2.4 million, with $50,000 increments offered between them and the underbidders – another family – until it stalled at $2.6 million. Both parties had been looking for months, Murphy said, with the home attracting strong buyer interest thanks to its location in one of Epping’s most sought-after school catchments. “This was a typical auction for us, but it is a bit harder generally at the moment than what it has been in terms of getting people across the line,” she said. “I think there’s more fear of paying too much and it’s the fear of having to pay that mortgage week in week out [that’s worrying buyers].”
Oh lookee, you can have this Sydney ex rental shithole (just the right hand side part) with common walls where you hear the neighbours fighting and screwing for a bargain basement price of only $1.66 million. Quick, get in fast! Being an old ex rental, my guess it will have many costly maintenance issues hidden away.
Newtown use to be a cheap as chips suburb but in 2014 the Sydney lockout laws were introduced and all the party animals move to Newtown.
themickey why you care so much about the house prices ? 99% of Aussie home owner want the prices to keep going up.
Selfish stupid entitled people who don't give a rats ass about slavery of people to the banks, the RE Industry and gummint. Australia floundering economically because so much money is funnelled into surviving. It's just dumb.
This is how the lazy Australian government attempts to deflect attention off itself by blaming supermarkets for inflation. It's a similar tactic to calling out builders to 'build more' because that's the reason for house price rampant increases. It's all government red herrings so sheeple can believe the government is tackling a problem, when they aren't doing bugger all. Australia supermarkets should face hefty fines for code of conduct breach, says report By Byron Kaye and Renju Jose April 8, 2024 https://www.reuters.com/business/re...nduct-supermarkets-millions-fines-2024-04-08/ People walk past a Woolworths supermarket in Sydney, Australia, June 16, 2020. Picture taken June 16, 2020. REUTERS/Loren Elliott/File Photo Report proposes mandatory code of conduct for supermarkets Cos should be fined up to A$10 mln or 10% of revenue for conduct breach, report recommends Rejects calls to give regulators power to break up big chains SYDNEY, April 8 (Reuters) - Australia's major supermarkets should face hefty fines if they do not comply with an industry code of conduct when dealing with suppliers, a government-commissioned report said while rejecting calls to give regulators the power to break up the big chains. Supermarkets with more than A$5 billion ($3.3 billion) in annual revenue - which at present are Woolworths, Coles, Germany's ALDI and wholesaler Metcash should be forced to comply with the code of conduct that has until now been voluntary, the interim report by former competition minister Craig Emerson recommends. "The existing Food and Grocery Code of Conduct is not effective. It contains no penalties for breaches and supermarkets can opt out of important provisions by overriding them in their grocery supply agreements. I firmly recommend the Code be made mandatory," Emerson said in the report. Companies should be fined up to A$10 million or 10% of revenue if they do not comply with the code, according to the report. The final report is due in June. Woolworths and Coles booked sales of A$64 billion and A$41 billion in 2023. The two biggest grocers in Australia ring up two-thirds of the country's grocery sales between them, prompting calls from growers and opposition leaders to break up the supermarket giants to improve competition and prices. Emerson's report, however, recommends against giving the antitrust regulator power to make supermarket operators sell assets, saying it could lead to higher market concentration. 'MAKE CODE TOUGHER' Australia's centre-left Labor government, of which Emerson is a former minister, is trying to show it can tame a cost of living crisis that has fuelled criticism of supermarkets where shelf prices have surged with a hike in fuel and labour costs. While there are six inquiries underway into the sector, the government has ruled out demands to introduce divestiture powers as demanded by the rural-focused Nationals, which are part of the conservative opposition, and the left-leaning Greens. "The whole point of this interim report is how do we make the code tougher and more compulsory, better dispute resolution and processes and bigger penalties for people who do the wrong thing," Treasurer Jim Chalmers told reporters. Divestiture powers were "not something we've been exploring because we have found better, more effective ways to deal with some of the issues in our competition policy landscape". Nationals leader David Littleproud, who has called for break-up powers over the supermarkets, told reporters the government had been too slow to "take action on supermarket price-gouging". A spokesperson for the Australian Competition and Consumer Commission, which would oversee a mandatory code of conduct and which is conducting a separate review of the sector, said Emerson's report highlights "several changes that the ACCC sees as important, such as meaningful penalties and a more independent dispute resolution process". A Woolworths spokesperson said the company supported making the code of conduct mandatory but added that it should apply to other large competitors like Amazon.com and Costco which had bigger revenues globally. A Coles spokesperson said the company was committed to "delivering value to our customers while maintaining strong, collaborative relationships with our valued suppliers".