A drop in the number of approvals as well as value of work is indicative of the challenges being faced by Australia’s building industry. The latest ABS figures reveal the extent of the problems in the industry: the number of approvals for new homes and apartments as well as commercial buildings saw a significant fall, while the 7.3 percent drop in the value of building work approved across the country during July was the weakest monthly result since late 2016.
According to Master Builders Australia CEO Denita Wawn, building activity is being hit by low expectations around the economy’s short-term growth prospects. The Government needs to incentivise businesses to invest and also fast-track infrastructure construction to help kickstart activity.
Master Builders Australia’s chief economist Shane Garrett says the number of approvals for new homes in July fell to its lowest since January 2013; driven by a reduction of some 19.6 percent in new apartment/unit approvals compared with June.
Garrett observes that approval volumes in the high-density part of the residential building market have not been this depressed since the middle of 2012.
While commercial building activity had been one of the economy’s strengths until recently, it has also taken a turn for the worse with the value of commercial building work receiving approval in July declining by 9.9 percent compared with the previous month, according to Garrett.
“Right across the spectrum, there appears to be a real absence of confidence and today’s figures confirm that building activity is paying the price,” he says.
It’s therefore important for the Government to get work started on major infrastructure projects as soon as possible to visibly demonstrate that better days are ahead, according to Garrett. This would also give people and businesses tangible evidence that things are indeed moving forward.