This article is from the Australian Property Journal archive
THE construction industry has started the year on a low note, falling 0.5 points to 46.3, led by a decline in the apartment sector.
According to the Australian Industry Group/Housing Industry Association Australian Performance of Construction Index, apartment building returned to negative territory after six months of expansion (down 7.9 points to 46.4), while house building recorded a second month of growth (down 0.3 points to 52.3).
Commercial construction was the weakest sub-sector in January, falling 3.5 points to 36.5, its sharpest rate of contraction since July 2013. Engineering construction also remained subdued (up 0.3 points to 41.5).
Ai Group head of policy Peter Burn said the further fall in construction in January is concerning both for the industry itself and for the broader economy.
“Over recent months the construction sector became increasingly dependent on the continuing strength of residential construction and particularly apartment building.
“While house building maintained momentum in January, the apartment sector dropped dramatically joining commercial and engineering construction in negative territory.
“The drop in apartment activity, together with the decline in new orders across all four construction sub-sectors, suggests that construction may not play the leading role in rebalancing the broader economy that it played in 2015. This emphasises once again the importance of developing new sources of growth across the economy,” Burn said.
HIA economist Diwa Hopkins said the results are consistent with a range of indicators suggesting that new home construction – apartment construction in particular – will pull back from the record levels experienced last year.
Australian Property Journal
