Welcome Guest [Log In] [Register]


Reply
Residential construction costs to rise as property market recovers; The price of building a home is expected to rise
Topic Started: 30 Sep 2013, 02:09 PM (401 Views)
Admin
Member Avatar
Administrator

Quote:
 
Home construction costs to rise as market recovers

BRIDGET CARTER AND ANDREW WHITE
September 30, 2013 12:00AM

THE price of constructing a home is expected to rise in the months ahead as the nation's largest listed building material firms increase product prices for the first time in years, thanks to an improving property market.

Stocks in the sector have risen by more than $2 billion to $22bn this month as investors price in expectations that the price rises will stick and volumes will increase.

But there is debate about whether low interest rates are inflating an unsustainable bubble in housing values.

While analysts anticipate a 15 per cent rise in new home approvals in the next year, building material prices have already been increased by some companies.

Sources suggest groups such as CSR, Boral and Fletcher Building will use the lift in building activity to increase their margins.

The companies previously kept prices steady, as builders struggling amid the difficult conditions would have been unlikely to absorb the costs.

JPMorgan building materials analyst Jason Steed said he expected a moderate improvement in the number of homes built in the next year, but the regional picture would probably be a factor in stock performance.

Mr Steed said the NSW market had remained stagnant over the last five years but some growth was starting to come through.

When Brickworks reported its annual results two weeks ago, its shares gained 2.8 per cent on the day because sales and volumes rose 20 per cent and improved results for building products were expected. Brickworks announced a lift in volumes towards the end of the year and said product prices had helped a 26.9 per cent increase in net profit, excluding significant items, to $100 million.

A 6 per cent lift in brick prices during the 12 months to July was one of the sharpest hikes in more than 15 years, managing director Lindsay Partridge said at the time.

The company said further signs that the market was improving had emerged, with 500 people coming through its Sydney showroom last week, more than double the typical volume.

A rise in property prices has prompted federal Treasurer Joe Hockey to say he hoped it would be a signal for property developers to go out and start projects.

Home building is considered a major driver of the economy, affecting employment, credit growth and retail spending.

The Reserve Bank has been anxious to stimulate the sector as the broader economy moves out of an extended mining investment phase.

More bullish brokers are predicting an extended new-home construction cycle that will stimulate demand for heavy building materials, construction equipment and skilled labour. Shares of Boral, the country's largest building materials business, have risen from $4.20 to $4.86 this month.

Glass, aluminium and building materials supplier CSR rose from $2.25 to $2.48 while James Hardie -- which is more exposed to the US housing recovery -- has lifted from $9.81 to $10.91.

New Zealand-focused Fletcher Building has jumped from $7.61 to $8.55, Brickworks from $12.25 to $13.80, Adelaide Brighton Cement from $3.35 to $3.70 and paint maker Dulux from $4.73 to $5.30.

Boral will increase cement prices by 5 per cent next month.

Read more: http://www.theaustralian.com.au/business/property/home-construction-costs-to-rise-as-market-recovers/story-fn9656lz-1226729554913
Follow OzPropertyForum on Twitter | Like APF on Facebook | Circle APF on Google+
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Create your own social network with a free forum.
Learn More · Register for Free
« Previous Topic · Australian Property Forum · Next Topic »
Reply



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy