Confidence in Australia’s building sector has been smashed by COVID-19, the latest report shows.

Releasing the latest edition of its How We Build Now Report based on phone and email interviews of 260 small, medium and large builders conducted by ACA Research, construction project management software provider Procore says industry sentiment has been affected since the pandemic broke out.

Prior to shutdowns in March, a pre-pandemic survey conducted in February indicated that 60 percent, 84 percent and 66 percent of small, medium and large construction companies were confident about their twelve-month prospects.

By a later survey in April, these numbers had fallen to 30 percent, 48 percent and 57 percent respectively.

Furthermore, companies surveyed expect the number of their projects to drop by an average of 34 percent and the value of those projects to decline by an average of 33 percent.

Concerningly, one third of those surveyed are considering closing their business this year.

The survey also found that:

• Aside from dealing with the pandemic, dealing with the increasing cost of raw materials and equipment is expected to be the most significant challenge in the next twelve months with 40 percent of businesses surveyed nominating this as a major challenge. This is followed by dealing with trade contractors and payments (38 percent), keeping up with regulatory changes (36 percent), staff management (including hiring and retention) (32 percent) and keeping up to date with new building and construction technologies (29 percent).
• 68 percent of those surveyed agree that they are under pressure from clients in terms of costs and timeframes.
• Rework is a significant issue, with contractors spending an average of 18 percent of their time on this.
• There was support for federated building standards (see note below), with 61 percent, 67 percent and 73 percent of small, medium and large builders agreed that ‘a federated set of building standards is needed to improve quality in the Australian construction industry’.

(Note: exactly what is meant by a ‘federated set of building standards’ is unclear. Australia already has a nationally consistent set of building requirements through the National Construction Code as well as standards which are issued by Standards Australia. Therefore, Australia already has a system of national standards and requirements in place. What is not consistent, however, are the building regulation regimes adopted by each state and the way in which the building industry is regulated across each state.

Most likely, therefore, the survey is not asking for opinions about a national code and national standards (which already exist) but rather about a national regime for building regulation (which currently does not exist)).

The drop in confidence comes amid concern about the likelihood of a severe downturn in the building industry as a result of COVID-19.

In its latest forecast, Master Builders Australia said it expected the number of new dwelling commencements during 2020/21 to come in at only 116,000 – well below pre-COVID-19 forecasts of 159,000.

In commercial, MBA expects activity to decline by 15.7 percent.

The survey also come as the Federal Government has announced a $680 million stimulus package in the form of grants worth $25,000 for those who either purchase new or newly constructed homes or who renovate existing homes.