Master Builders Association demands bail-out as builders sink

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By Leith van Onselen

The Master Rent-Seekers Builders Association (MBA) is in full panic mode after a few builder collapses and has demanded governments take immediate policy action to bail-out the industry, including stamp duty exemptions for first home buyers and first home buyers grants. From The ABC:

OAS Group, based in Beverley in Adelaide’s west, went under this week, days after custom home builder Platinum Fine Homes announced it had entered voluntary administration.

Civil engineering firm York Civil and Dowling Homes also went into liquidation this year and followed several other construction companies which had closed their doors since 2015.

Master Builders CEO Ian Markos said local companies would continue to suffer unless the housing market was overhauled…

“You’ve had people who’ve worked their life to build a business and they’ve put everything they have into that and they obviously lose it…

In a statement issued by the liquidator, OAS directors said its demise was caused by the continued downturn in the housing industry, increased competition, and low margins…

“You don’t need companies to fail to see the economic environment and where the pressure points on the industry are coming from,” Mr Markos said.

“But you need to look at how other states have managed it and how they’ve turned the situation away.”

In Queensland, the State Government removed the requirement for the mandatory installation of rainwater tanks at new homes, and both Victoria and New South Wales introduced stamp duty exemptions for first home buyers.

He said both initiatives were included in Master Builders’ ‘Make Housing Great Again’ plan.

“It gives an injection in the arm of the building industry in those states, but importantly it’s put a lot of people into their first home,” he said.

The document also outlined a boost to the First Home Owners’ Grant and a Productivity Commission review of land and property taxes and charges.

It’s amazing how most other industries are expected to stand on their own two feet and live or die without public support. But somehow the building industry sees itself as a protected species deserving of taxpayer support.

The fact of the matter is that Australia has just experienced its biggest housing construction boom in modern history, so a slowdown is inevitable:

If home builders cannot compete in this environment, then they must fold. This is how ‘markets’ are supposed to work.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.