Home-Building Firms Fear Recession

Press, Volume CIX, Issue 32078, 28 August 1969, Page 1

Home-Building Firms Fear Recession

{ (From Our Own Reporter). WELLINGTON, August 27. An urgent warning to the Government that despite increased housing permits the home-buiiding industry is facing a sharp recession is being sent to the Government by the Timber Merchants’ Federation.

After an inquiry extending to Auckland, Wellington and Christchurch, the executive of the federation today unanimously adopted a recommendation warning the Government of the urgent need for a review of loan limits. This is being sent to the Minister of Housing (Mr Rae). The inquiry showed that in Auckland master builders have been alarmed at the fall in sales. This can be traced to the fact that the gap between loan limits and the amount needed to build a house is now too wide for the average young married couple to be able to close it. During discussions in Auckland it was suggested that the situation applied to that area only. Further inquiries have shown, however, that though the situation may be aggravated in Auckland, both Christchurch and Wellington are also suffering. There is a sharp division in all three cities between the. construction industry, which is booming, and the homebuilding industry, which faces recession. Carpenters and other work-

ers leaving the home-building industry do not usually join construction firms but are lost to building generally. The federation says that house completions for the financial year ended March, 1969, reflected the fourth annual successive decline. Activity is the lowest since 1960, with the exception of the 1963-64 year. Drops Reported Though bousing permits were greatly increased in the January-June period, one large home-building firm in Auckland reported a drop in business of 47 per cent. This was confirmed tonight by Mr G. Keir, of Palmerston North. Mr Keir, who is a member of the executive of the National Housing Council, conducted the inquiry after it had been requested by the council of the building industry. Mr Keir said that another large Auckland building firm reported a drop of 38 per cent, and a third said that its business had decreased by “more than a third.” “The importance of this survey lies in the fact that some six months elapses between the decision to build a house and the time taken in the arrangement of loans, capitalisation of family benefit, and other means of raising finance, Mr Keir said

tonight. The builders are the first to become aware of difficulties.” No Shortage The survey revealed no shortage of labour in the bousing section of building. Though the big construction firms engaged in commercial undertakings were recruiting workers in Australia, the home-building section had plenty of staff. A way to correct the imbalance would be for the Government to raise loans to $6950, plus an allowance for a person with a freehold section, to adjust capitalisation limits, and to make other adjustments which would close the vital gap, said Mr Keir.