Event: Denita Wawn interview with Chris Kenny, Sky News
Date: Tuesday, 7 March 2023, 8.35pm AEDT
Speakers: Chris Kenny, host Sky News; Denita Wawn, CEO Master Builders Australia
Topics: inflation, interest rates, housing, supply
Chis Kenny, host Sky News: Let’s talk about what all this is going to do to the housing sector. I’m joined now by Denita Wawn from the Master Builders Association. Good to talk to you Denita. Tell us about the impact in the housing sector. We know that house prices have come off right around the country. Maybe not as dramatically as some people feared, as yet. But is it going to cost jobs in the construction sector? And is there any sign of that yet?
Denita Wawn, CEO Master Builders Australia: Unfortunately, it’s going to start hitting our sector by the end of the year, Chris. We’re seeing a lot of activity but no money to be made because we are all under fixed-price contracts. Secured prior to those incredible inflationary figures that we saw. Housing has led the way on inflation. With nearly 20 per cent for some building materials. So we’re seeing the cost of building a home anywhere between 15 to 25 per cent increase. And yet, we’re working under fixed-price contracts signed well before that. But then, of course, the interest rates. 10 in a row means we are seeing a significant decline in building approvals. But more alarmingly, an even greater decline in sales. Our members who are running display homes are saying they are seeing less than 50 per cent foot traffic from this time last year. And it is dwindling. So all of our forecasts are showing that we will have a dramatic downturn in private building activity next year. At the same time we are talking about the desperate need for housing in this country. So it is quite incredible this situation that we are now in. It’s not good for builders, it’s not good for their sub-contractors, their employees and it’s not good for Australians needing a home.
Chris: Yes, it’s going to be a real worry, right? Because you’re going from boom to bust. Buildings, renovations, tradies could name their price basically during the pandemic because a lot of that work was going on. And still pretty good at the moment in terms of employment, isn’t it? But if what you’re saying if you’re heading for a cliff, approvals not going up and a lot of the work not being there, there’s going to be suddenly a lot of people without enough work.
Denita: That’s right, Chris. And of course, there’s a lot of building activity but no money to be made because we’re working under fixed-price contracts that didn’t account for those massive inflationary products. So builders are feeling a huge pain at the moment as are their sub-contractors and as are their clients as they try and work through these difficult inflationary times. But equally, we’re stuck between a rock and a hard place where interest rate increases are also seeing a significant decline in sales. So we’re really concerned about the industry for the calendar year 2024. Our forecasts raising that to be a potential. It’s now coming to fruition from the sales figures to date. That means a loss in jobs and that’s why it’s so incredibly important that the government look at putting more money into social housing as we’ve argued under Housing Australia. That we fast track the Housing Accord that the Treasurer implemented in October last year. We were grateful for that but we now need the states, territories and the federal government as well as councils to get their act together and resolve those housing supplying barriers that we’ve had for generations.
Chris: Yeah, we’ll hear more about that in the budget I would have thought in May as well. Thanks for joining us Denita. I appreciate it. Time is coming for the construction sector on the back of these interest rate rises.
Dee Zegarac | National Director, Media & Public Affairs
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