Builders make unseen changes to homes

Homebuilders are opting for cheaper houses, given weaker economic conditions and problems with affordability, building supplies giant James Hardie says.

Chief executive Louis Gries says homebuilders generally are building cheaper houses to ensure they can still make a profit.

Builders were "value-engineering" and "de-featuring" houses to lower costs.

Houses are also smaller and being built with lower-cost materials.

Granite bench tops that once may have been standard are now optional.

"They pull any costs out of the home that homeowners are not aware of," Mr Gries said on Wednesday, after announcing a return to profitability in James Hardie's third quarter.

"Meaning it's not easy to see if you've got five-eighth-inch gypsum (plasterboard) or half-inch gypsum, or if you have 24-inch spacing on studs versus 16 (inches), or you have two-by-sixes or two-by-fours (the width and depth in inches of wooden planks used in construction)."

Mr Gries expects an eventual reversal in this trend, but it might take two or three years.

Given uncertain conditions in the housing market, James Hardie has trimmed its earnings forecast for the year.

The group, which makes most of its sales in the US, said the US housing market was picking up, but the Australian market remained subdued.

In the three months to December 31, sales volumes rose 17 per cent in the group's US and Europe fibre cement business.

The company said this provided further evidence that the housing recovery in the US was gaining momentum.

Although volumes in the US were higher, average sales prices were lower.

Costs were also higher as the company expanded production capacity in anticipation of a continued US market recovery.

But improvement was likely to occur over a protracted period.

The growth rate in the US could be constrained by ongoing tight credit conditions and higher levels of unemployment.

Mr Gries said no one knew what the Australian market was going to do, so James Hardie assumed it would stay tough.

James Hardie booked a net operating profit of $US31.5 million ($A30.95 million) in the third quarter to December 31, compared to a loss of $US4.8 million ($A4.72 million) a year earlier.

The result included the company's asbestos-related costs, regulatory costs and tax adjustments.

Excluding those costs, operating profit rose to $US28.8 million ($A28.29 million) from $US27.7 million ($A27.21 million).

The group downgraded its full year earnings forecast, excluding the asbestos and other costs, to between $US136 million ($A133.61 million) and $US141 million ($A138.53 million).

Last November, the group had forecast full year earnings of between $US140 million and $US150 million.

James Hardie shares were 18 cents higher at $9.53 at 1550 AEDT.

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