4 days ago
'Great undersupply' of housing in Brickworks CEO Mark Ellenor's sights after $14b merger with investment firm Soul Patts
The chief executive of Australian brickmaker Brickworks plans to capitalise on the 'great undersupply of housing' facing the country after recently revealing a $14b merger.
Brickworks revealed a historic merger with investment firm Soul Patts on Monday, causing the share prices of the companies to rise 27.6 per cent and 16.4 per cent respectively.
The merger undoes an arrangement from 1969 where each company owned large portions of one another's stock to defend from takeover bids.
Both CEOs appeared on Sky News' Business Now, where Brickworks boss Mark Ellenor said the company was seeing 'some green shoots' in the construction sector and local economy, but noted there was more work needed to ignite growth.
'We've had an easing of inflation, unemployment numbers have moderated and we're seeing some growth,' Mr Ellenor said.
'We're definitely still at the bottom of the cycle.'
He said two recent cash rate cuts from the Reserve Bank of Australia since the beginning of this year had led to some increased demand in Queensland, South Australia and Western Australia, but more populous states were lagging behind.
'(In) our two core states of New South Wales and Victoria we've not seen that uplift as yet, but there's just a great undersupply of housing in this country,' Mr Ellenor said.
'We've underbuilt homes for the last four years and Brickworks (is) very well placed to take advantage of the upturn when it does come next year.'
Soul Patts CEO Todd Barlow said he was confident about Australia's future, but noted some concerns about strains on the economy.
'We're not seeing any real signs of distress or emerging difficulties, but we're multi-years into a market that has not really generated increasing earnings across the whole market, yet we're seeing higher prices,' Mr Barlow said.
'That concerns us a little bit, but generally I don't see any major issues on the horizon for the economy.
"We're hopefully positioning ourselves for some better opportunities ahead.'
The Brickworks boss' comments come as dwelling approvals fell 5.7 per cent in April, according to the Australian Bureau of Statistics.
The overall decline in April was driven by lower apartment approvals, per the ABS' head of construction statistics Daniel Rossi.
'A drop in apartment approvals drove a 19 per cent fall in private dwellings excluding houses,' Mr Rossi said.
'Meanwhile, private sector house approvals were up 3.1 per cent.'
This followed a 14.4 per cent drop in March as apartment approval rates sunk compared to the start of the year.
'In original terms, 5,612 apartments were approved across March and April, compared with 8,625 approved across January and February,' the ABS said.
The RBA's second cash rate cut of 2025 is expected to further the turnaround in house price growth after it slowed in 2024.
Originally published as 'Great undersupply' of housing in Brickworks CEO Mark Ellenor's sights after $14b merger with investment firm Soul Patts
