The construction sector has been hailed as one of the standout performers of the Australian economy, especially since the downturn in mining investment took hold. As the spring months get underway, this is a good time to look back on its performance so far in
2015, before predicting what's in store for the end of the year.
Residential vs non-residential activity
There have been opportunities for construction recruitment in both the residential and non-residential sectors over the course of the past eight months. However, it is the home building industry that has recently led the charge.
Data from the Australian Bureau of Statistics (ABS) shows that the value of completed building work was up 3.8 per cent between the June quarters of 2014 and 2015. This was largely buoyed by residential activity, which posted an increase of 7.4 per cent in seasonally-adjusted terms, compared to a 1.8 per cent fall in non-residential project values.
Within the residential industry, the private sector has seen an upswing in activity. The ABS reveals the number of private sector dwelling approvals excluding houses increased 25.2 per cent in seasonally-adjusted terms between July 2014 and 2015.
The home building sector has therefore proved to be the one to watch, and could be a source of construction jobs moving forward.
Looking to the future
Master Builders Australia is hopeful that these recent rises in activity will be sustained for a while longer. Chief Economist Peter Jones explained there is a "pipeline of work" already in place, as 223,000 homes were given the green light during the 12 months to July.
"The volatile high rise apartment sector bounced back by 6.1 per cent offsetting a fall of 3 per cent in detached housing approvals as the mature stage of the cycle unfolds," acknowledged Mr Jones.
It is the home building industry that has recently led the charge.
Meanwhile, the Housing Industry Association (HIA) believes policy reform will be the key to ensuring the future success of the construction sector. The HIA New Home Sales Report showed transactions are currently at a historical high, so efforts must be made to ensure this continues.
While the all-time low cash rate of 2 per cent has gone some way towards supporting growth, it won't be enough in the long term. HIA Chief Economist Harley Dale instead believes policy reform will be the answer, with a particular focus on how new properties are taxed.
The construction sector appears to be moving in the right direction, it could now be down to the actions of policymakers to ensure this remains the case.