The building industry has been noted as now being in recession. Although this is bad news for those employed in that industry, it is great news for us wHeregroup investors.

With less new houses being built, this puts pressure on existing properties as there are less properties to lease, which leads to higher rents on our properties. The vast amounts of new properties are also being built in mining areas, which again only goes to help us, as we don’t invest there. From a RBA perspective, it puts downward pressure on rates, potentially making our houses more cash flow positive.

One mans loss is another mans gain…

Have a read of the report below:

Residential building activity contracted significantly in the March quarter, according to new research.

Data from the Australian Bureau of Statistics found the total value of residential building work done fell by 1.9 per cent in the March quarter with new dwellings down by 1.2 per cent and renovations down by a sizeable 5.5 per cent.

“New residential building work done has now fallen for four consecutive quarters, while renovations work done has fallen for three consecutive quarters,” Housing Industry Association senior economist Andrew Harvey claimed.

“Combined with leading indicators which show further weakness ahead, there is no doubt that the Australian home building industry is in recession.”

According to Mr Harvey, as the residential building industry continues to contract, Australia will see real consequences for jobs, small businesses, the supply of new housing and rental costs.

“Governments can no longer ignore the negative impacts on employment, housing stress and Australia’s economy,” he said.

Comparing the March 2012 quarter with the March 2011 quarter, new housing work done is down by 8.7 per cent while renovations (alterations and additions) activity is down by 5.5 per cent.

On a positive note: there will some cheap blocks of land being sold as a result of this along with housing companies doing serious deals on new houses. Just make sure you find the right locations for this and negotiate hard.