LVR moves slowing housing supply

Chief executive Warwick Quinn said he had heard from many builders in the past fortnight who had lost potential clients and seen their inquiry levels fall dramatically since the move to force banks to cut low-deposit lending was announced.

He said companies that specialised in the low-deposit new home market had seen an immediate impact.

He was aware of one larger company that had already been forced to lay off staff and restructure its operation as a significant percentage of its business was constructing homes for low-deposit customers.

Quinn said: “New homes form 15%-20% of all house sales and while it is unclear how many of those require high LVR lending, anecdotal evidence puts it at around 15%. That’s some 3000 new homes that are at risk of not being built going forward, which, if that happened, will put the construction sector back about two years. That has significant flow on effects to the economy, housing affordability and stalls construction sector expansion.”