Infrastructure projects need to be fast-tracked across Australia to get the momentum back in the building industry.
The latest ABS data reveals a noticeable drop in building activity in recent months with the total volume of building work done in Australia dipping by 0.3 percent during the March 2019 quarter compared with the preceding quarter (October-December 2018).
The total volume of building work is also down by 0.9 percent when compared with the same period last year.
Master Builders Australia chief economist Shane Garrett called on governments at the state and territory levels to work together with the federal government to fast-track recent commitments on infrastructure, including both transport and social infrastructure projects.
According to Garrett, the amount of commercial building work rose by 3.2 percent during the March 2019 quarter, reaching a new all-time high. This trend is attributed to strong population growth, which is boosting demand for new shops, cafes and restaurants with robust employment growth benefitting office and industrial building activity.
However, the volume of new home building has fallen to its lowest ebb since the end of 2013, observes Garrett.
“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 percent 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 the coming months to see how all this good news affects the pipeline of activity," Garrett says.
Therefore, to get the building industry moving again, federal, state and territory governments must fast-track major infrastructure projects they have committed to, and get things happening on the ground in a real and tangible way, he added.