Even builders are bullish that 2013 will be a good year for property: Terry Ryder

You know things are on the up when even builders are bullish.

There are growing signals from the economy and the property industry that 2013 will be a good year. Consumers have begun the new year with a new attitude, and real estate professionals are reporting the change in atmosphere. Some say they’ve never been busier.

But positive press statements from builders and developers? I never thought I’d see the day.

First, Master Builders in Queensland put about the view that the building industry would experience a turnaround in 2013. It reported an improvement in building approvals in 2012 and suggested most areas of the state would see more activity this year.

Second, the Urban Development Institute of Australia declared that the signposts are pointing to better times for the industry. It too reported that dwelling approvals were higher last year than in 2011 and forecast better times for 2013.

Master Builders housing policy director Paul Bidwell said: “We believe it is important to focus on the positives for the industry, including the four interest rate cuts during 2012, reasonably strong economic fundamentals, such as employment and population growth, and the Queensland Government's first-home owner construction grant, which commenced in September 2012.”

Well, yes. Couldn’t agree more about focusing on the positives. But, until a few days ago, the builder/developer lobby groups have been running a “bad news sells” campaign, with Master Builders and the Housing Industry Association acting as pall bearers rather than standard bearers for their industry.

I’m hoping this recent change means that they’ve learnt that negativity doesn’t work. Perhaps they noticed that people had stopped listening to their culture of complaint.

The previous negativity coming out of the home building sector was quite baffling. For years they’ve been talking down their own industry and wondering why no one was buying their products.

Imagine what would happen to car sales if the motor industry pumped out weekly press releases declaring that cars were hideously expensive and no one could afford to buy them. That essentially is what the home building industry has been doing for years.

Pessimism is highly contagious, and it’s no surprise that home buyers have been shunning new homes. The message they’ve received is that established homes are much cheaper.

Home loans have risen 6.1% – both for owner-occupiers and investors – over 12 months. But home building commencements have fallen. Buyers have been opting for old over new.

The home building industry has shot itself it both feet and now, hobbling around on crutches, is mounting a valiant fight-back with a smile on its face.

I wish them lots of luck, but they could have saved themselves a lot of pain by adopting optimism a lot earlier.

To help them with this new style of campaign, one that actually talks up their industry, here are a few helpful suggestions:

• Try selling the benefits of buying new, rather than old. They include, for investors, lower ongoing maintenance costs and better depreciation benefits. For first-home buyers, they include government grants and stamp duty concessions which are available only for new homes.
• Highlight the areas where new home building is thriving. There are plenty of them around regional Australia, headed by Gladstone and Mackay in Queensland.
• Emphasise the array of special deals and discounts on offer around the nation from builders and developers.
• When the ABS publishes statistics on home loans, building approvals and anything else relevant to real estate, paint it with a positive brush rather than the standard negativity approach.

The building industry could turn around in a matter of months.

Terry Ryder is the founder of hotspotting.com.au and can be followed on Twitter. His next Property Observer webinar is February 12. 

Free webinar with Terry Ryder: Finding the next Gladstone – where investors should look in 2013 for hotspots

For many years the Queensland mining town of Gladstone has been among the first names mentioned when property investors and commentators discuss property investment hotspots.

However, according to hotspotting.com.au’s Terry Ryder, the reality is that investors have missed the best time to buy in Gladstone.

Investors would be better off looking for the up-and-coming locations with hotspot qualities.

In this webinar, Ryder will provide Property Observer readers with:

• Regional locations that have the potential to match Gladstone’s past performance
• Insights into the factors shaping these markets to aid property investment selections
• Locations that property investors should avoid or be highly cautious about considering

Webinar date: Tuesday, February 12 at 12.30pm.