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Positive outlook for housing starts and construction pipeline

  • November 03, 2015

Positive outlook for housing starts and construction pipeline

After falls in the current financial year, construction companies expect a boost in the value of work in 2016, while ABS building approvals point to a healthy outlook for multi-unit dwellings.

The latest Australian Industry Group/Australian Constructors Association Construction Outlook survey finds a bigger pipeline of infrastructure activity is set to drive a turnaround in construction work in Australia.

The value of construction work is expected to fall by 2.4 per cent this financial year, before growing by 4.7 per cent in the next financial year.

Multi-level apartment development is expected to show further strong growth – up by 13.7 per cent this financial year, followed by a further 8.1 per cent rise the next.  This reflects high apartment building approvals in Sydney, Melbourne and Brisbane in recent months.

Australian Industry Group chief executive, Innes Willox, says the improving outlook is “good news” for both the sector and the broader economy.

“It’s a promising outlook of a more rapid rebound than had previously been expected,” Willox says.

According to Lindsay Le Compte, the Australian Constructors Association’s executive director, the survey reflects a “growing confidence in the capacity of the industry to recover from the setbacks associated with the slowdown in the resources sector over recent years.”

Meanwhile, latest figures from the Australian Bureau of Statistics points to an emerging trend for greater apartment and multi-unit living.

ABS figures for September recorded 18,900 building approvals across the country, down from the previous highs of 20,000 per month recorded for much of 2015.

The Property Council’s executive director Nick Proud says the 1.9 per cent drop in private house approvals nationwide in September was offset by continued strength in apartment approvals which grew by 6.1 per cent on the previous month.

“Apartment and multi-unit approvals are almost at parity with private sector houses, suggesting a changing demographic trend and increased growth in our major cities.”

While nationally approvals still had enough momentum to hit 230,298 year-on-year on a seasonal basis, Proud says one good year won’t make up for a decade of underbuilding.

“We are only now starting to see new housing supply eat into demand in key markets like Sydney and take some of the heat out of house prices.

“A strong, sustainable pipeline of new housing is imperative to ensure future housing affordability and must be a priority for government.”