Construction profits up

The Master Builders Association of WA says two new economic surveys have confirmed that building industry conditions are set to remain strong in 2006.

The latest MBA National Survey of Building and Construction has confirmed that industry confidence has been underpinned by healthy business profits and a large amount of work still in the pipeline.

The MBAWA/ Bentleys MRI Survey of Building Industry Conditions made similar conclusions, although some projects had been scaled back or deferred due to rapid cost escalation.

Industry profitability has improved in recent months as the rate and frequency of cost increases had slowed and industry demand remained strong.

In the September quarter 2005, 48 per cent of housing and commercial builders reported that they experienced above-average profits.

This was a significant increase from six months ago, when only 14 per cent of household builders and 31 per cent of commercial builders reported above-average profits.

In the housing sector, 48 per cent said they experienced average profits, and 4 per cent said they had below-average profits, as opposed to 33 per cent in the March quarter.

The commercial building sector reported that 36 per cent made average profits, and 16 per cent below-average profits, compared with 21 per cent in the March quarter of this year.

No builders surveyed in the residential or commercial sector reported poor profits, and a general upswing in profitability can be seen over the last year from the quarterly surveys.

MBA housing director Gavan Forster said the state’s strong economy was the main reason why the building sector was performing so well.

“Strong population growth and major resource projects are creating an unprecedented demand for infrastructure,” he said.

“No industry downturn is in sight, unlike in the eastern states.”

Mr Forster said significant trade shortages, particularly for plasterers and tilers, remained.