Builders try to time property price falls, hope construction costs will ease

“As is typical with a slow cycle, builders invest themselves and build new homes, they know prices will rise again at the end of the construction phase, and they want to catch the bottom of the cycle for customers who miss out on buying opportunities,” Reardon said.


With housing construction set to slow over the next two years, demolition and rebuilding will remain popular with buyers, he said.

“We expect 2023 to be the year of knocking down and rebuilding. Land prices are so high and good land is hard to come by because of the shortage of supply. Those who own a piece of land, we will probably see more in that market than before. work,” he said.

“We’ve seen a significant drop in lumber costs, down 20% in recent months. We expect the availability of other materials to improve.”

Builders expect strong demand for these new homes once prices start to stabilize and rise again, Reardon said.

CoreLogic’s head of research Tim Lawless cautioned anyone trying to pick market lows, saying that while house price falls in Sydney had slowed, they were down from 2.3 per cent a month three months ago. 1.3% in NovemberSignificant risks lie ahead.

More and more builders are planning for the housing market to level off and pick up again, but risks remain.

More and more builders are planning for the housing market to level off and pick up again, but risks remain.Credit:Getty Images

“Depending on what happens to the economy and interest rates, there’s a good chance the decline will accelerate,” Lawless said.

“It’s fair to say that with inflation now down, we’re likely to see a peak a little earlier than initially forecast … there’s a lag between when interest rates peak and the housing market finds a bottom.

“It’s always easy to find the bottom in retrospect, but it’s notoriously difficult to do that in real time.”

Cooleys auctioneer Michael Garofolo said the slow return of builders to auctions could be a harbinger of a bottom in the property market.

The housing market remains clouded.

The housing market remains clouded.Credit:petre

“They say there’s an opportunity where there wasn’t an opportunity last year, everything’s hot and untouchable, it doesn’t matter if it’s on a main road, if it has an easement,” Garofolo said.

“Now they see an opportunity, good prices on prime blocks, flat blocks with no easements. So their cost is better.

“It’s a good bellwether, and when you see builders, professionals who know their margins coming in, the market is closer to the bottom than many were predicting.”

Selling agent Namir Mikha of Adrian William sold three dilapidated properties in the inner west to builders in recent weeks, including 35 O’Hara Street in Marrickville, and almost all of the competitors at those auctions were also builders.

“In general, they did say it’s a good time to buy because by the time we build the market, the market will bounce back,” Mikha said.

“They know the competition won’t be that tough [at auctions] Because your parents or non-construction background will find it a bit more expensive to get building materials.

“These guys are very driven and they know how to put a formula together and still make a profit from the sale.”

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