Review on Construction Growth in Australia

Posted: 08/01/18 12:02

Review on Construction Growth in Australia - Australian Tenders

Construction growth in Australia curbed slightly in December 2017, but still expanded for an 11th month in a row.


The Ai Group and Housing Industry Association Performance of Construction Index (PCI) supported 4.7 points to 52.8 points in December, remaining well above the 50-point level indicating expansion.

According to CommSec economist Ryan Felsman, the main housing construction sector is likely to remain strong in 2018, supported by low interest rates and strong population growth.

Similarly, the boom in government expenditure on transport related infrastructure and major commercial building projects could continue boosting employment and lifting wages.

Further, Mr Felsman highlighted that the speed of wages growth has remained relatively high during 2017 amid reports of a shortage of skilled workers as major projects ramp up.

The slower growth in housing, engineering and commercial construction for December was offset by an increased growth in construction for apartment building. Apartment building projects grew for the first time in four months, despite the recent tightening of investor-only lending.

HIA senior economist Shane Garrett welcomed the improvement in apartment building, as he highlighted that the lift in activity came despite tighter regulatory management and restrictions on foreign investors.

Foreign investor participation in the apartment market is a vital aspect of supply to the rental markets right across Australia. Impeding investor participation risks undermining the healthy functioning of rental markets everywhere.

The 3.0-point rise in apartment building to 50.7 was well below the recent high of 68.5 from May 2018.

The recent Australian Associated Press report highlighted that the engineering construction and house building remained the top performers, but overall new orders dropped into negative for the first time in eight months.

Builders and constructors dealt with higher energy, construction materials and wages costs, the latter lifted by the continuing transport infrastructure boom.

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