– will only last 18 months before asking prices exceed what potential buyers are willing to pay, M&A lawyer Ian Williams said.
A transformation is taking place in Australia’s highly fragmented, low-margin and poorly capitalised home-building sector as Japan’s largest property companies expand both here and in the US to offset the effects of a faster-than-expected decline in their domestic population.
In Australia, the concentration of materials supply in the hands of a few players, such as BlueScope, Austral Bricks, CSR and Fletcher Building, gives builders – even the very large ones – less leverage than they might otherwise have in the procurement chain.“Japanese housing companies have come to realise that local management is essential to the success of business,” Mr Williams said.
The main reason is their access to capital and ability to build homes speculatively, even before having a contracted buyer and deposit on hand.“We’re unique in having homes sold then built. The only barrier to building and then selling is having access to large capital reserves,” Housing Industry Association chief economist Tim Reardon said.