THE downturn in the housing market is beginning to bite corporate Australia.
Shares of big building supplies company CSR plunged almost 15 per cent yesterday after it warned the housing market was taking a hit from high interest rates and declining confidence.
"It is clear in the last three months there has been a softening in the housing market outlook," managing director Jerry Maycock said outside the company's annual meeting.
Big players in the sector - and in the associated property sector - continue to be savaged by the market.
The stock prices of property players Becton and Mirvac have both dived more than 60 per cent since late last year, while home builder AV Jennings has dropped 41 per cent since its August peak and building supplies company James Hardie has lost 37 per cent since July last year. And scrip in listed property trust GPT was battered again yesterday, slumping another 6.4 per cent to $1.62.
Australian Bureau of Statistics data shows home loan approvals have plunged 25 per cent since February.
Peak construction industry body Master Builders Australia has warned the pain in the residential sector looked likely to spread into industrial building.
The Master Builder Building and Construction Index, released on Wednesday, fell for the fourth quarter in a row, dropping into negative territory for the first time in four years.
MBA chief economist Peter Jones said the credit crunch, rising costs and high petrol prices had hammered the residential building market.
He said high interest rates had savaged household budgets and the effects were now beginning to flow through to the rest of the economy.
"It could be nastier than we thought," he said. "Monetary policy is a very blunt instrument - have we reached a tipping point?"
Yesterday CSR executives told shareholders at the meeting in Sydney the company expected group earnings to increase more than 5 per cent in fiscal 2009 - well below analysts' expectations of a rise of about 14 per cent.
While CSR is best known as a sugar refiner, it makes a third of its sales in building products.
Mr Maycock said NSW's residential housing market weakness was spreading to other states.
"NSW remains pretty soft, and we're seeing some reduction in confidence in Queensland which had been one of the fast-growing states.
"In Victoria, things are looking a little better but still some softening of sentiment."
He said lower consumer confidence levels coupled with high interest rates were denting the housing market.
"Overall it is a combination of sentiment, interest rates, house prices remaining high and just general consumer confidence which seems to have taken the wind out of the sails of the market," he said.
CSR chairman Ian Blackburne told shareholders consumers were losing confidence.
"Some of our core business sectors, such as housing, continue to be challenging," he told shareholders.
"We are seeing clear signs of interest rate stress and loss of consumer confidence.
"Having said that, we are focused on the medium term and I believe CSR is establishing a strong platform for growth to continue to deliver value for shareholders."
Mr Maycock played down recent falls in CSR's share price, saying the decline had been part of an overall market trend, and said CSR did not expect to break itself up in the near term.
"We're only going to do that if it creates additional value for shareholders, and right now we don't see that as being the case," he said.
CSR posted a net profit of $177.4 million -- down 35 per cent from last year. CSR closed 34c lower at $1.97.
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