Report confirms suppliers concerns about building slowdown

By Craig Zammit

SYDNEY: A report released by the Housing Industry Association (HIA) has highlighted the effects of last month’s interest rate hike on the new homes market, causing the building industry to further decline and leaving suppliers and retailers in the whitegoods category to feel the affects.

According to the report, sales of new homes and units were down 10.1 per cent in May, while new detached homes sales also slumped, dropping 11 per cent, with New South Wales being hit the hardest, crashing 17.8 per cent.

“There is absolutely no doubt that all categories in the major kitchen appliances category are down. This has been supported by feedback from our retailers as well as sell-in data,” said De’Longhi major appliance manager, Peter Marantos.

“The downturn in the economy and building industry as well as consumer spending and consumer sentiment, combined with a rise in interest rates and petrol prices, are all affecting the industry. There are a couple of categories that are of concern compared to the same period last year. Overall it confirms for us that the market is down.

“The next 12 months will be tough as we are not expecting an improvement in the housing market in the next 12 months. Housing industry projections suggest that the market is not expected to improve until 2008,” he said.

In the dishwashers market, a rush of consumers performing kitchen renovations has provided a life-line for brands in the category, with sales of dishwashers turning a 1.5 per cent drop in unit sales the year ending May 2005 into a 1.6 per cent increase in sales for the year ending May 2006.

“The fact that less units were delivered to new dwellings has been more than compensated for by a significant surge in the number of customers who either undertook complete kitchen renovations or upgraded existing dishwashers,” said Miele Australia, group product manager – domestic appliances, Rudolf Niemoeller.

Fisher & Paykel national sales manager, Tony Sweeney admits the downturn in the economy and the housing market has impacted all appliance categories across the board.

According to Electrolux director – cooking and dishwashing, John Brown, the rate increase and subsequent decline in the economy has presented companies in the cooking category both challenges and opportunities.

“The cooking category continues to mirror the trends of the building industry and while cooking is still experiencing the same pressures and downturn in business, it has fortunately led to interesting opportunities for growing value in products,” he said.

However according to LG category manager – whitegoods, Glacel Lubrin, the recent drop in the sales of new homes and units hasn’t had any considerable impact on LG’s whitegoods business, despite the 5.9 per cent drop in overall sales of cooking appliances for the year ending May 2006.

“In terms of the whitegoods category as a whole from LG’s perspective, we haven’t seen any of these factors contribute to any decline in sales, our sales have remained quite strong. Other factors such as the rise in interest rates and increase in petrol prices would have had a more adverse affect on the whitegoods industry as a whole,” she said.

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