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Building slump forecast for 2000

THE Australian building industry will enter a twelve month slump in 2000/01 with activity falling by 17 per cent, says the major annual building industry study by BIS Shrapnel.

Building in Australia 1999-2014 forecasts marginal growth of 2 per cent in the current financial year, based primarily on a strong rebound in detached housing commencements before the GST is introduced in July next year.

The report says all sectors will be affected by the slump next year. Thereafter, the building industry will return to more buoyant conditions with predicted growth of 9 per cent in 2002/03 and around 12 per cent in 2003/04.

BIS Shrapnel director of building services, Robert Mellor said: “We expect a sharp economic downturn in 2001.

“New residential construction and alterations and additions will suffer the largest declines since both sectors are sensitive to economic factors, particularly rising interest rates.”

The report concluded that residential building will peak in the current financial year before suffering a major downturn in 2000/01 resulting from excess dwelling stock.

The report also concluded that retail building probably peaked in 1998/99 with growth of 64 per cent in NSW and 39 per cent in WA. Oversupply would cause commencements in 2000/01 to fall by 40 per cent before recovering.

Lower population growth projections would also have a dampening effect on long term growth.

Hotel commencements are forecast to decline by 21 per cent in 1999/2000 and by 46 per cent in 2000/01.

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