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1995-96: a poor year for housing

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11 September 1996

3 rd F lo o r C o n s t r u c t i o n H o u s e

2 1 7 N o r t h b o u r n e A v e .

T u r n e r , C a n b e r r a

A C T 2601 T el: (0 6 ) 2 4 9 1433

F a x : (0 6 ) 2 4 9 1373

1995 - 96: A POOR YEAR FOR HOUSING Statement by Wilhelm Harnisch, National Director Economics & Housing

The preliminary dwelling commencement figures for the June quarter 1996, which fell by 3.2 per cent (seasonally adjusted), confirms statistically what house builders already knew, that 1995-96 was a poor year for housing. The June quarter result brings total dwelling commencements for 1995-96 to about 124,000 units, a fall o f 27 per cent on the previous year.

A combination o f factors caused the industry to "simply run out o f steam" during 1995-96. Pent up demand for housing turned negative following three previous years o f strong growth. Low population growth over the past five years coupled with a lower annual

migrant intake exacerbated a situation o f negative pent up demand. During 1995-96 the industry suffered from a number o f setbacks which kept it in prolonged decline over the year.

In December 1995 talk o f possible increases in interest rates saw home buyers confidence fall. In January 1996 the calling o f the Election for March created further uncertainty in the housing markets, causing households to defer their purchasing decisions. The only positive for the industry occurred in June when the banks and other financial institutions entered a period o f fierce competition to gain greater home loan market share, resulting in both variable and fixed mortgage rates falling. This buoyed home buyers confidence which saw the July housing finance figures, released yesterday, rise strongly. The July housing finance figures were a positive for the industry by bringing it to the starting block for a recovery.

For further information contact Wilhelm Harnisch BH: Mobile:

(06) 249 1433 015 484 300

Master Builders Australia Incorporated

A.R.B.N. 008 383 453 Incorporated in

South Australia with

limited liability