“Governments at the state and territory level must work together with the Federal Government to fast track recent commitments on infrastructure, including both transport and social infrastructure projects, in light of today’s very mixed results for building activity,” Master Builders Australia Chief Economist Shane Garrett said.
ABS data released earlier indicate that the total volume of building work done in Australia dipped by 0.3% during the March 2019 quarter compared with the last three months of 2018. Compared with a year earlier, the total volume of building work is down by 0.9%.
“Commercial building is one of the economy’s pillars at the moment. The amount of work done here rose by 3.2% during the March 2019 quarter and has reached a new all-time high. Strong population growth is boosting demand for new shops, cafes and restaurants with robust employment growth benefitting office and industrial building activity.
“In contrast, the volume of new home building has fallen to its lowest ebb since the end of 2013. This is mostly due to another sharp reduction in apartment/unit starts during the March 2019 quarter, meaning that high density dwelling commencements have lost 41.8% over the past year. Continued price falls, tight credit conditions and an absence of confidence have all contributed to the slump. As well as the obvious challenges for the building sector, the housing downturn is also holding consumers back, hurting demand in the economy.
“The figures released this morning take into account activity only up until the end of March. Since then, there has been a bunch of very good news for the building sector with the April budget heavy on infrastructure commitments and the conclusive outcome to May’s federal election. We’ve had two interest rate reductions, a significant package of tax cuts passed, the relaxation of APRA’s mortgage rules – and the new First Home Loan Deposit Scheme kicks off in January. We will keenly await building figures over coming months to see how all this good news affects the pipeline of activity,” Shane Garrett said.
“A real opportunity now exists to get all parts of the building industry moving again. We’ve heard lots of commitments on infrastructure in recent times but the challenge now is for federal, state and territory governments to fast track these major projects and get things happening on the ground in a real and tangible way,” concluded Shane Garrett.