Recent reports have provided varied forecasts for residential construction in Australia. While the data has been subject to a range of interpretations, it is widely agreed that an increase in dwelling and residential construction is needed to maintain a healthy economy and job market.
Previous research has demonstrated the significance of residential construction. This is largely due to the ‘multiplier effect’ discussed in a 2007 Australian Bureau of Statistics (ABS) publication
According to the report, each $1 million invested in construction generates an additional $3 million for the economy. Figures also reveal that that the construction industry has employed almost 8% of the work-force in Australia from 1999-2000.
Executive Director of the Residential Development Council, Nick Proud, says that construction activity is likely to improve in the near future, having increased steadily since the Global Financial Crisis.
“Residential development is playing a significant role in the economy right now and will continue to support any improvements in national outlook in the 2015 financial year and beyond” Mr. Proud said.
A comparison of construction in Australia’s capital territories reveals that works are rising rapidly in New South Wales, Queensland, Victoria and Tasmania. The estimate for building projects has increase by 2.4 per cent during the March 2014 quarter.
However, the recent dominance of mining and resource construction has been cited as an issue of concern. Figures derived from a survey of private businesses indicate that mining capital expenditure will fall 20% in the 2015 financial year, creating a gap in the economy that may be difficult to fill.
Current low interest rates are expected to significantly boost new dwellings. These numbers are set to peak in 2017-2018, before returning to moderate levels throughout the following years.
Meanwhile, the estimated total value of building has declined by 3.3% in May and has fallen 1.1% over the past five months.
The Residential Development Council said that the 2014 budget has mixed implications for the property and construction industry.
Executive Director Nick Proud expressed some disappointment, particularly in regards to the discontinuation of the National Rent Affordability Scheme.
However, Mr. Proud said that other reforms such as red-tape reduction and infrastructure investment could lead to positive results.
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