Tamawood eyes market turnaround and starts cutting home prices
Home builder Tamawood has claimed its strategy of shrinking-to-survive the market upheaval of the past year has worked and it was now reducing the cost of homes by about $15,000 a home.
Tamawood said the market was turning
The Brisbane based company said the it took steps when the former Morrison government introduced the Homebuilder grants as a way to keep the construction sector alive.
It limited the number of “builds” it did and that allowed it deliver on what its commitments. It also reduced the geographical area of its operations to those where it could access trades and suppliers.
It was a step that also protected its staff and it resulted in “no significant stress leave” in the past year.
“All of these measures had an impact on the full year 2022 result but the board believes that they were necessary to navigate through one of the most difficult periods the domestic construction industry has experienced,” chair Robert Lynch said.
Not that the company escaped lightly. Lynch said 60 per cent of the work days in the second half of the year were affected by rain. There also were supply and labour shortages and increased demand from the insurance sector caused by floods.
Lynch said the company was also seeing a strong turnaround. Appointment numbers were up 200 per cent on four months ago, but still 40 per cent below the level of October 2021. There was an 11 per cent improvement in the past month.
Its AstiVita business was also seeing price reductions from Chinese suppliers which was flowing on to a 3 per cent to 5 per cent reduction in house prices.
The price of shipping containers was down about 25 per cent on a year ago, which had had a small impact on the cost of each house it built.
“Sales conversion has also improved from four months ago as a result of customers we are seeing being more motivated to purchase,” he told the company’s annual general meeting.
“We are seeing encouraging signs of recovery in supply of materials and pricing stability. In some instances we were notified of price reductions by a small number of domestic suppliers.”
“We have begun to reduce house prices for future work _ an average of $15,000 per home _ at a time when our competitors are continuing to increase prices which is creating a less aggressive sales environment.”
However, he said the first half of the financial year was still being impacted by concrete and labour shortages as well as higher interest rates and inflation.
“The board is optimistic that some reductions in supplier prices and normalised weather conditions, after a third La Nina, will result in an improved second half.”
