As Australia’s new home building market commences an anticipated decline, larger builders are grabbing a greater share of the pie, leaving smaller builders to fight over an increasingly dwindling market share.
Unveiling its ranking of the nation’s biggest home builders by dwelling unit commencements, the Housing Industry Association together with Colorbond Steel said the nation’s largest 100 builders increased their share of the home building market from 30 per cent in 2015/16 to 34 per cent in 2016/17.
This means that whilst housing starts overall are expected to have dropped from 233,700 in 2015/16 to 217,800 in 2016/17, the nation’s largest home builders increased their starts by 8.5 per cent to 74,542.
Larger builders are also raking in more cash, with the Housing 100 increasing its revenue earned from new home construction in 2016/17 by 22 per cent to come in at $22.61 billion.
The number of starts required to make the top 100 list also increased from 96 in 2015/16 to 108 in 2016/17.
For smaller builders, the combination of a declining market and greater market share being gobbled up by larger players represents a hit on two fronts.
There is not only a shrinking pie overall, but they also have to make do with a smaller share of this.
HIA principal economist Tim Reardon said large builders often take a bigger slice of the pie when the market turns down.
With greater brand recognition and bigger marketing budgets, larger builders are more readily able compared with their smaller counterparts to pull in work notwithstanding the tougher conditions.
“It’s not uncommon in building as in other industries to see larger players increase their market share at the start of a downturn in the market,” Reardon said.
In terms of ranking, Metricon Homes retained its number one spot by breaking ground on 4,367 homes and apartments, whilst Sydney apartment builder Dyldam Developments leapt to number two with 3,605 dwellings.
Perth-based ABN Group, Brookfield Multiplex and Meriton Apartments rounded out the top five with commencements of 3,343, 3,112 and 2,955 dwellings each.
Meriton also took out the number one spot for detached housing (3,876) whilst Dyldam took out top spot amongst multi-residential builders (3,605).