Broker: construction dip will push market value down

by Caroline Dann23 Jul 2012

Falling construction figures for new home builds will push the value of existing properties down, says a leading broker.

Philip Edwards, senior loan advisor at My Loan Expert, told Australian Broker Online shunning new builds in favour of an existing property will cause the market value to fall.
“If people can’t afford to build their own property, the demand for cheaper housing increases, so vendors who want to sell will have to drop their prices to meet the demand,” he said.
“What I’m seeing is people trying to build where possible and on their budgets. First home buyers can generally afford only $350 to $400k properties. The rise in costs for construction and stamp duty has nullified people’s ability to upgrade,” he added.
His comments come as studies reveal a significant drop in construction figures over the last two months.
The Housing Industry Australia's National Outlook report this month found construction activity had dropped by 11.2% during the first half of 2012. It predicts levels will reach GFC lows in the second-half of 2012.
"That situation now appears unavoidable, to the detriment of thousands of businesses and households, not to mention the overall domestic economy," said HIA's senior economist Dr Harley Dale.
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  • by Richard 23/07/2012 1:46:23 PM

    If something is in short supply the price goes up, not down. The constraints come from inability to borrow, not lack of new housing.

  • by Philip Edwards 24/07/2012 12:53:59 PM

    Understand your comments Richard. I intended to convey the message that the first home owners grant changes would bring prices down on existing homes, as it's the 2nd home buyer selling to the FHOG applicants that want to build, but the changes to the FHOG qualifying criteria has meant that the vendors selling in this market are reducing their prices to meet the reduced market conditions.

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