This article is from the Australian Property Journal archive
DECLINES across the beleaguered construction industry gathered pace in August as Victoria’s latest round of lockdowns filtered through to the rest of the country.
The latest Australian Industry Group/Housing Industry Association Australian Performance of Construction Index fell by 4.8 points to 37.9 during the month, following a small rebound in July, with approvals increasing as restrictions across the country were relaxed. Readings below 50 points indicate contraction in activity, with lower results indicating a faster rate of contraction.
“The sharp fall in activity in Victoria was a major factor in the downturn while border restrictions in other states have hampered builders and constructors who are reliant on interstate supplies and the availability of tradies from across borders,” Ai Group head of policy, Peter Burn said.
“Businesses in the industry have been watching their order books closely for some time and the further decline in orders in August will be a major concern both for their businesses and for their employees and suppliers.”
Occupational health and safety requirements and disrupted supplies are also slowing work on site – even in locations with no local activity restrictions for construction.
The report stated that JobKeeper and apprentice support wage subsidy schemes are “providing life support to struggling businesses across all facets of the construction industry”.
New orders were down across the board, falling 8.4 points to 35.1.
Housing activity dropped 9.6 to 37.4, and new orders plunged by 10 points to 37.9. Orders were hit hard by the closure of display homes and travel restrictions, as they were in April and May.
Apartments activity tumbled 11.1 to 22.8 while new orders dropped 11.8 to 29.3.
HIA economist, Angela Lillicrap said the contraction in residential building activity is ongoing. The first wave of the pandemic had taken housing construction to its fastest rate in two decades during the June quarter.
“The index tracking new orders for houses dropped sharply after posting two stronger months following the announcement of the Australian government’s HomeBuilder program,” Lillicrap said.
“Demand for apartments is likely to be constrained until population growth returns. The HomeBuilder program will bolster activity in the detached house segment, but the broader softening in new orders highlights the risks facing the residential building sector,” she said.
Commercial activity dropped 9.6 to 32.4, remaining at historically low levels, as work on sites is slower due to distancing and PPE requirements. New orders were steady, but were in negative territory at 43.6.
Engineering plummeted by 18.5 points to 27.0, with few non mining projects commencing. New orders fell 7.5 to 35.0.
Input prices lifted 9.0 to 67.3 and selling prices by 6.6 to 42.4. Wages moved into positive territory, up 6.1 to 53.5.
