Newspaper article The Chronicle (Toowoomba, Australia)

Building and Recovery on Horizon

Newspaper article The Chronicle (Toowoomba, Australia)

Building and Recovery on Horizon

Article excerpt

MASTER Builders Australia this week released forecasts for the building and construction industry showing a mixed recovery across the three major sectors based on a positive growth path over the three-year forecast period to 2015-16.

The forecasts are derived from a sophisticated model purposely built for the building and construction industry developed by Master Builders in collaboration with Independent Economics.

While the forecasts predict a positive growth path for the industry, the current economic climate presents many significant headwinds that may become impediments to the timing and strength of recovery in the forecast period.

Peter Jones, chief economist for Master Builders Australia said the return to more positive conditions for the industry implicit in the forecasts signals light at end of a very long tunnel for the residential and commercial building sectors, but does not herald a return to boom era levels.

The three-year forecasts to 2015-16 for the three sectors follows:

Residential Building

The value of Residential Building work done is set to improve strongly, but from a low base, over the next three years after marginal growth in 2012-13.

The value of residential building work done, in real terms, is forecast to grow from $46.2 billion in 2012-13 to $60.9 billion in 2015-16.

In terms of commencements, dwelling starts are predicted to rise to 164,000 in 2013-14, 179,000 in 2014-15 and 183,000 in 2015-16 a[pounds sterling] more than a decade after dwelling starts peaked at around 175,000 in 2004.

The underlying assumption is that low interest rates will work to release significant pent up demand after a long period of underbuilding that occurred at the same time as Australia experienced strong population growth.

aThe stronger performing states are forecast to be Queensland, New South Wales and Western Australia,a Mr Jones said.

aThe key risks to the forecasts are frail consumer confidence, economic uncertainty, asset price volatility and ongoing softness in the labour market.a

Non-Residential Building

Non-Residential Building work done is predicted to decline further in real terms in 2012-13 followed by modest growth in the following years. …

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