Simonds Homes’ has shifted their trajectory from focusing on new builds to revenue diversification in other areas.

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Construction giant Simonds Homes has called on government and regulators to do all they can to help more homebuyers enter market after reporting a $35m financial turnaround in the past 12 months.

The volume home builder reported a $4m profit and an almost $35m turnover in the last financial year amid industry-wide troubles on the back of major builder Porter Davis’ collapse.

Simonds Homes chief executive David McKeown said a restructure over the last few years has put the business back on track.

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Mr McKeown pointed out that nationally the first-home buyers market has seen the most-challenging market conditions in a long time.

“Inflation, supply issues, Covid and labour constraints have driven up the costs from an industry point of view,” Mr McKeown said.

“From a buyer sentiment, 13 interest rate rises, financing, affordability and governmental policy are significant drivers.

Simonds Homes chief executive David McKeown has led the business back into the green again.

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With Victoria accounting for a large portion of Simonds Homes sales, Mr McKeown pointed to a few things that played out at state level have impacted the developer giant.

“We believe there is a confidence issue in the construction industry in Victoria – the Porter Davis collapse, and more insolvencies have hurt us from a consumer perspective,” he said.

“While building costs are now largely under control, significant challenges around such things as interest rates and bank lending criteria continue to make the ‘Great Australian Dream’ unattainable for many.

Mr McKeown said the Victorian market had its own challenges in comparison to the other states.

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“This, in turn, is a direct contributor to the housing crisis which, despite the efforts of governments in setting ambitious targets for new home builds, continues to worsen rather than improve.”

Mr McKeown called for new ways to support first-home buyers impacted by financial issues.

“We as the industry and the government need to lean into this issue not just for builder viability and societal impacts,” he said.

“Young families are doing everything right but are going backwards because their savings aren’t getting them to own a home.

“Anything we can do to promote interest in buying here in Victoria: changes to the Australian Prudential Regulation Authority’s serviceability buffer, land taxes, interest rates decreases are just a few things that could be done.”

First home buyers are struggling to land a home amid difficult market conditions.

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Villawood Properties executive director Rory Costelloe said the Australian Prudential Regulation Authority’s 3 per cent serviceability buffer over current loan rates, raised from 2.5 per cent during Covid, was holding back housing supply.

“Buyers are willing to buy but banks cannot finance many after applying the extra 3 per cent lending margin over their loan rate,” Mr Costelloe said.

“Buyers using a home loan calculator to determine repayments think they can afford a home but then discover they can’t after the financier applies the additional 3 per cent margin when assessing a borrower’s ability to repay.”

APRA raised the home loan serviceability buffer from 2.5 per cent to 3 per cent in 2021 in anticipation of rising interest rates.

Simonds Homes’ competitor Metricon is also confident that the industry will come back strongly next year on the back of interest rate cuts after it reported a nearly $80m turnover in the last financial year.

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