Media Release
25 February 2009
CONSTRUCTION STRENGTH SET TO FADE
Statement by Mr Peter Jones, Chief Economist
Construction work done increased in the December quarter
but the strong growth phase that has
been experienced by the industry over the past five years is set to change, according to Master
Builders Australia, the peak body for the building and construction industry.
Mr Peter Jones, MBA’s Chief Economist said, “The key to the outlook for the construction industry
over the next two years
will be whether an upswing in the residential sector can offset looming
weakness in non-residential building and engineering activity as the previously strong pipeline of
work begins to fell away.”
“Despite a strong result in the December quarter, the outlook for engineering construction will begin
to turn
in line with the fall in commodity prices, although a massive pipeline of resources-related
work yet to be done and State Government infrastructure spending should cushion the fall.”
“The credit crunch is the issue for commercial builders being choked by tough lending criteria
imposed by financial institutions.
“Funding issues continue to threaten commercial building projects with softening market conditions
to leave a significant hole in building activity.
“Residential building faces another ratchet down in activity during the first half of 2009, but will be
boosted by fiscal and monetary policy stimulus measures as the Government attempts to recession
proof the economy in the face of the global financial crisis.
“A major undersupply of housing combined with
aggressive rate cuts,
the
$21,000 tripling of the
First Home Owners Grant for new dwellings, and public housing stimulus should eventually have the
desired result.
“The fact that nearly 30,000 people received the First Home Owners Boost in the 3½ months to end
January provides further evidence that first home buyers are being encouraged back into the market.”
“Confidence is missing link. Once households believe that the economic situation has stabilised, a
housing upswing will gather momentum.
Seasonally adjusted, the chain volume of construction work done in the December quarter 2008 rose
by 1.7 per cent to $35.4 billion to be 13.0 per cent above levels in December quarter 2007. The chain
volume of building work done in the December quarter was unchanged at $18.2 billion, to be up 3.9
per cent on the previous December quarter. Work done on residential building fell by 1.0 per cent to
$10.4 billion,
to be up 2.9
per cent on
the corresponding figure a year earlier. Non-residential
building rose by 1.3
per cent to $7.6 billion,
and is up 5.3
per cent on
the previous year’s level.
Engineering construction work done rose by 3.6 per cent to $17.3 billion to be up 24.3 per cent above
the previous December quarter level.
Further information contact: Peter Jones, Chief Economist, Ph: Mobile 0403 440 838
NEWS 
