Construction Trades Oversupply Worsens

Tuesday, August 6th, 2013
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The impact of the current downturn in residential construction throughout Australia continues to flow through to the sector’s workforce, with the latest report showing that the oversupply of tradespeople throughout the country has worsened.

In the June quarter, the HIA Trades Availability Index rose 0.5 points to come in at 0.24 – the highest level on record in more than three years (any value above 0.00 indicates an oversupply of the particular trade in question), according to the HIA Trades Report released by the Housing Industry Association (HIA) last week.

Worst hit were those in landscaping, painting, joinery, roofing and site preparation, while particularly high levels of oversupply were shown to exist throughout regional Queensland, regional Victoria and Sydney.

The index, which is derived from survey responses from HIA members and therefore reflects the situation primarily in the residential sector, has now shown an oversupply for nine consecutive quarters.

Furthermore, with overall trade prices having risen by just 0.4 per cent in the quarter and 2.2 per cent year on year, the report also suggests tradespeople are having trouble in securing substantial increases in rates amid soft demand for their services.

Indeed, over the past 12 months, prices for site preparation have fallen by 9.1 per cent while those for electrical trades are down 4.5 per cent.

HIA Trade Availability

Still, there are fears of looming skills shortages and upward pressure on prices and construction costs in some areas once demand picks up toward the middle of the decade.

Even in today’s subdued environment, HIA executive director of industry workforce development Liz Greenwood says, there are only just enough qualified tradespeople in areas such as plastering, bricklaying, ceramic tiling and electrical trades to meet current levels of demand.

HIA senior economist Shane Garrett says the latest report will not come as any surprise to those on the ground.

 “While new home building is starting to recover from decade lows, the national improvement is modest to date” Garrett says, adding that persistent challenges in securing finance were not helping and warning any moves to increase tax or regulatory costs would further hamper any likely recovery. “Meanwhile, the pace of renovations activity is very weak.”

The latest figures come amid increasing evidence of weak employment conditions throughout the building industry.

Around 1.004 million people were employed in the sector over the three months to May, according to the most recent seasonally adjusted ABS estimate – the third lowest level on record for the past three years.

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