12 February 2025
The review announced by Treasurer Jim Chalmers into regulations around lending practices for first home buyers and developers is a welcome step for all involved in the building and construction industry and supply chain.
The announcement confirmed that the Australian Prudential Regulation Authority and Australian Securities & Investments Commission will soon launch consultations and implement changes to help unlock more finance from the banks.
Master Builders Australia has long called for measures to encourage banks and other financial institutions to take a more realistic and sensible approach to lending and financing practices.
Bank lending practices have significant potential to cause adverse impacts for consumers, builders and all parties involved in the construction supply chain.
These impacts can exacerbate and amplify a range of existing pressures on builders, and contribute to a raft of poor outcomes for industry ranging from even greater financial burden through to potential business insolvency.
Lending policies are also having a practical effect in inhibiting building activity, including approaches to valuation, sequencing and the mechanics of staged payments.
The entire building and construction industry will be looking forward to engaging in the review to highlight how unnecessary pressure arising from lending practices can arise and encourage the adoption of more realistic and pragmatic approaches for the future.
Quotes attributable to Denita Wawn, CEO Master Builders Australia:
“This is a sensible first step in encouraging more investment into the industry and tackling housing supply and affordability challenges.
“Higher Education Loan Program (HELP) repayments are unfairly weighted in serviceability assessments and restrict the ability for first home buyers to purchase a home.
“We have heard from our members about the difficulty in accessing finance from banks without significant pre-sale of dwellings which is unsustainable in the current economic environment and is driving investment out of the industry.
“As we have seen in the recent increase in insolvencies in the industry, Master Builders encourages the Federal Government and regulators to look at other practices along the supply chain which hold back new home building and unfairly places too much risk on builders.
“The lending practices of most financial institutions encourage the use of ‘fixed-price’ contracts which leave little or no margins for clients and builders to incorporate agreed variations or if something goes wrong.” Ms Wawn concluded.
Media contact: Dee Zegarac, National Director, Media & Public Affairs
0400 493 071 | [email protected]