Joe Hockey has just taken one mighty swing with a deadly punt that is likely to wipe out thousands of jobs in the building industry.
The latest announcement by Australian Prudential Regulation Authority (APRA) to limit investor finance in an effort to cool the housing industry is so far off the mark, it’s likely to destroy any chance our country has of creating new jobs to plug the employment gap created by the declining mining sector.
Builders all over the country are now stalling projects in dwelling construction. They know that owner occupiers will not buy off plan projects, and that investors seed these developments, allowing them to get off the ground.
So why is APRA doing this? To give banks another opportunity to raise profit margin? Then success was immediate!
If their attempt is to get owner occupiers to fill the investor void, they are grossly misled. Owner occupiers want a home that’s ready now – something they can walk through, touch the walls and imagine where to put the couch and TV. Occupiers need to see the finished houses, townhouses or units.
Investors provide the surety to builders to get multi-dwelling projects off the drawing board, enabling them to get firm finance with unconditional, early sales.
I, for one, am mothballing my DA site (1000 jobs) as are other builders lucky enough to not have started their projects. Those that have started are worried that there are high income but high LVR buyers who will not settle. APRA wants only buyers with 20 per cent deposit to settle.
It is not a good time to be a builder in Australia!
Can Hockey show leadership here? How about creating housing and creating jobs instead of killing them?
“I need a raise in my commission,” the real estate agent said to his manager. “There are three other companies after me.” “Is that so?” asked the manager. “What other companies are after you?” “The electric company, the telephone company, and the gas company.”