Comments from Neil Brennan, Director of Business Advisory at William Buck Chartered Accountants.
The residential construction industry has raised concerns of a declining demand for residentialย developments, after the state budget infrastructure announcements on Tuesday.ย
The Victorian government announced $13.7 billion would be invested in infrastructure to accommodateย Victoriaโs high growth population and estimated it would support the creation of over 75,000 new jobs.
Neil Brennan the National Leader of the Property and Construction Division at William Buck Charteredย Accountants, said with property turnover predicted to decline, the announcement could haveย ramifications for the residential construction industry.
โWhile infrastructure is essential, creation of these jobs will require the same skills the constructionย industry need; putting the supply and demand of skilled workers out of balance and resulting in higherย labour costs,โ Brennan said.
โWith increasing labour costs, lack of land turnover and reduced incentives for investors, there is noย doubt residential construction will be under pressure and is the reason the government is expecting aย decrease in property tax revenue,โ Brennan said.
Brennan said those in the residential property industry would have to start preparing now.
โProfitability is always a key concern for builders and there should be a plan for addressing this now,โย Brennan said.
โResidential property owners can start looking at pricing structures to subsidise or avoid future loss,โย he said.
Brennan said that embracing new opportunities may also be the way forward.
โA smart move is to look at regional areas and take advantage of government incentives to take theย pressure of Melbourne suburbs and support regional growth hubs,โ Brennan said.
Brennan said ย a strategy for managing declining demand for residential developments should be theirย priority, to consolidate their current position.
โIdentifying what makes you unique, building upon existing relationships and focusing on your nicheย market will help ensure your experience and expertise is always in demand,โ said Brennan.
โItโs clear the government has been focused on slowing residential construction to be able to catch upย on the infrastructure demands that an overflowing population creates,โ he said.
โSo, whilst the balance may not swing in constructionโs favour now, we all know that demand willย eventually increase again, and it will be those that weather the storm that will grow and prosper,โ heย said.
ENDS
FOR MORE INFORMATION:ย
Estelle Pentland
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William Buck
Ph: +61 3 8823 6830
E: estelle.pentland@williambuck.com
