Construction

If you're a long term reader here, and no I'm not going to unfurl a list of every government agency, bank and brothel who send regular traffic here, but let's just say if you're in the Daily Planet and reading this site, you ain't getting value for money. All you real estate agents and bankers, you should only read this on work time - not at the knock shop.

But yeah, long termers. One of my earliest old gold standards was rambling about the levels of dwelling construction against the numbers of people being added to the Tasmanian population. Now depending on your time frame and we'll use the exact ABS figures, so the population is right, from 2003 to 2009 Tasmanian builders were pumping out a new dwelling per 1.62 people being added to the state population, when the average was at 2.4.

Now, the boys at the HIA have been notorious for using the arbitrary figure of Tasmania being 200 houses short a year, why not 225? Why not 175? Well who would know, maybe it's to scare up some business. But there's always a slight problem when you scare up business, because you might just scare up too much...

TASMANIA'S largest building company has laid off 18 workers since Christmas and industry groups have warned of job losses across the sector.

Master Builders Association state executive director Michael Kerschbaum said Federal Government stimulus funding had dried up, causing a downturn in construction work.

"Businesses are having to let workers go," he said. "A lot of them are depressing apprentice intakes as well.

Mr Kerschbaum said Tasmania's building and construction industry had significantly grown during the past decade and was now the state's third-biggest employer.

Gulp...

Now ignore the recent stimulus because that was just the safety pin keeping up the last brace on a few pairs of overalls, it wasn't real, nor sustainable and more related to sticking up BBQ sheds at inflated prices. But cruising back to 2003, if all of a sudden you're building a new dwelling for every 1.62 people being added to the state's population and it continues for a significant period of time, sooner or later, you might end up with one or three thousand too many.

Or as I once said, builders will end up with a constipated supply of specs jammed up their back passage. It's no secret there's empty and unloved new builds currently looking for an owner. The odds of being 200 houses short a year? Almost as good as me being guest speaker at the REIT awards this year. Consider the percentages of empty houses for sale I'd found in the North and North-West. That revelation served as something of strobe light to an epileptic, local real estate agents were having fits everywhere and screaming SHORTAGE even louder. 

Now back to the HIA...

Housing Industry Association state executive director Stuart Clues(sic) said the sector was in its worst slump in seven years.

"Since 2003, our guys have been flat out, busy, plenty of work," he said.

"They were expanding their business, putting on apprentices.

"We were propped up by stimulus spending and first home buyer grants but they stopped and what we're seeing is a 30 per cent decline.

"We're getting calls from builders desperate for work."

If I was a builder, I certainly wouldn't be living in hope. Because while I don't like to make too many big predictions on directions, Tasmania is clearly coming apart at the seams. The boom in construction over the past decade? It's interesting the Clunes-dawg points this out, especially the specific point of 2003 because from 2002 it seemed like someone lit a bottle rocket with Tasmania's house prices stuck to it.

From 2002

Burnie up 264%
Devonport up 197%
Launceston up 187%
Hobart up 215%

That bottle rocket is up there in the night sky somewhere, you just have to keep watching for the explosion and all the horror will be revealed. Builders flat out building since 2003, the industry expanding at a significant clip, dwellings being built at a rate of 1.62 per person added to the population all while house prices increased around 200% in the same period?

Can anyone say speculative construction bubble?

Listings are up, sales are down, finance is back to where it was before this boom period began and the only sticky thing right now? Prices.

Back to the words of Michael Kerschbaum...

He said many were relying on overdrafts to pay workers, in the hope of landing jobs in coming months... plumbers, electricians, engineers, architects and painters were among those hit by the downturn.

The now obvious to some, will be apparent to all in the aftermath, but many of these people had no idea what kind of market they were operating in. Like I've said before, if your own association keeps talking about shortages, buying another block and sticking up another house probably seems like a good idea. The demand is there, right?

Oh the demand is coming - the demand for answers. Fingers will go in every direction and no one will know anything. Leading indicator? Voodoo Blue HSV GTS Commodores offered for roadside sale.