Tamawood reports an unexpected increase in inquiry and preliminary fees for May

Despite housing approvals at their lowest point in a decade, a Queensland builder says it has had an “unexpected” bounce in activity back to pre-Covid levels.

A leading home designer and builder has worked through the economic headwinds affecting the industry and reported a strong bounce back in activity to pre-Covid levels.

Brisbane-based Tamawood told the ASX that in May the company – which operates the Dixon Homes brand – had an increase in appointment numbers of more than 200 per cent and a 34 per cent rise in pre-construction fees compared to the corresponding period last year.

It is said the figures were in line with the levels experienced prior to the start of the Covid pandemic and were likely to be reflected in 2023-24 first half results.

Non executive director Lev Mizikovsky, who founded the company 1989, said they were surprised by the numbers.

“At the end of they day, seeing what’s happening out there, it was a real shock to all of us. It was definitely unexpected. We thought we had to tell our shareholders,” he said.

“We have a low cost model. We don’t have display homes. We are very concerned with not wasting customers money and we are very conservative.

“We never charge extra. We sign a contract and refuse to do variations and the banks see that.”

Tamawood reported to the ASX today they believed the improvement stemmed from its debt free status, ISO 9001 certified Quality Assurance system and securing lower cost, quality products with the purchase of AsitVita, which is primarily involved in importing and distribution of kitchen, bathroom and solar products.

It has also continued engagement with its software supplier SEnterpriSYS allowing them to adjust prices early to reduce the negative effects of price rises on its margins.

Last year, Tamawood was ranked Queensland’s 13th-largest home builder in the HIA-Colorbond Steel 100 Housing ranking with 359 dwelling starts, a 43 per cent drop on 2021.

In a statement to the ASX in February Tamawood reported that in the first half of 2022-23 revenue was $38.4m – down 27 per cent from the same period in 2022 and net income was $819,000, down 65 per cent from the first half of 2021-22.

Tamawood Ltd told the ASX that in May it has had an increase in appointment numbers and deposits reflective of the levels experienced prior to the start of the Covid pandemic.

The encouraging news comes after Australia’s home building approvals in April 2023 remained at their lowest level in over a decade.

According to the Australian Bureau of Statistics monthly building approvals data released on May 30 showed detached house approvals declined by 3.6 per cent in April and multi-units fell by 16.9 per cent.

On a quarterly basis detached house approvals were 15.4 per cent lower than the same time in 2022 and multi-units down were down by 38.9 per cent.

However, in the three months to April 2023 compared to the same period last years Queensland approvals fell by just 4.2 per cent buoyed by interstate migration and rising house prices.

Housing Industry Association senior economist Tom Devitt said building approvals have been hit by interest rates, construction costs, labour shortages and bad weather.

HIA senior economist Tom Devitt said building approvals have been hit by interest rates, construction costs, labour shortages and bad weather.

“A lot of the housing data we have been going through shows that the housing market is really struggling to get project going,” he said.

“We have flagged for a while that there are really long lags in this particular cycle and the Reserve Bank started increasing interest rates last May and normally its about six months from when rates go up to when on the ground activity starts to decline and this time around it is closer to 18 months.

“It really depends on what the RBA does and what the Government does but we expect dwelling starts to trough in the 2024-25 financial year.”

Tamawood shares rose 7.8 per cent to $2.14 on Monday.