Housing Comeback Fuels Construction Industry Confidence

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Tuesday, January 21st, 2014
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Confidence within the building and construction industry in Australia is back on the rise as the recovery in home building activity drives an underlying improvement in business conditions and employment, a national survey of 373 respondents from the industry suggests.

Published by Master Builders Australia, the December Quarter National Survey of Building and Construction shows that the index for business confidence within the industry has risen well above the neutral 50.0 mark, indicating the majority of those surveyed expect industry conditions to improve over the next six months.

Meanwhile, the index denoting current operating conditions rose to the satisfactory mark as conditions began to improve following a sustained downturn.

Driving the rebound in confidence is an underlying improvement in home building activity, whereby the latest figures from the Australian Bureau of Statistics indicate that the number of housing starts which took place throughout the country rose from 146,343 in the year to September 2012 to 163,250 in the twelve months to September last year.

Builders were also less pessimistic about the non-residential sector amid an easing in both input cost increases and financial constraints.

business confidence

Master Builders Australia Chief Economist Peter Jones says the results point to an encouraging outlook for the sector in 2014 which will allow the industry to pick up some of the slack in the economy as resource investment winds back.

“As a forward indicator, the Master Builders Australia survey adds strength to recent ABS data indicating that housing is now on a recovery path set to assist the economy through 2014 and beyond” Jones says.

“The latest survey results add weight to Master Builders Australia’s forecast for residential building to improve strongly over the next three years, with the number of dwelling starts predicted to draw near to 200,000 in 2016.”

The latest results follow last week’s Property Council of Australia-ANZ Property Industry Confidence Survey which showed improving sentiment in property and construction amid rising levels of planned construction activity and buoyant expectations regarding capital growth across all major sectors of the industry.

 residential expectations

Other key observations from the Master Builders survey results are as follows:

  • Whilst sales remained sluggish, display centre traffic rose to  encouraging levels and the backlog of work lifted from low levels – around 30 percent reported work on hand of more than six months, up from 22 percent in the previous survey
  • Financing constraints eased amid an improvement in credit availability
  • Expectations regarding input cost increases moderated amid still reasonably soft (though tightening) labour market conditions
  • With the index for employment intentions rising to be close to the neutral 50.0 mark, it is clear that significant reductions in headcount are becoming less likely and the benefits of the recovery are flowing through to the sector’s workforce
  • In a further positive sign for workers, the latest survey showed finding suitable staff had become more difficult across all of thirteen categories listed. Particular areas where conditions had improved include site management, bricklaying, steel fixing, labouring and wall and floor tiling.
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