28/11/2019 - 14:06

Homebuilding flat, civil construction on rise

28/11/2019 - 14:06

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Fresh forecasts have pushed any recovery in Western Australia’s embattled home building sector out another year, while concerns have been raised about the capacity of the state’s building sector to cope with a predicted increase in activity in civil and engineering construction.

Homebuilding flat, civil construction on rise
Homebuilders are continuing to deal with historically-low levels of housing construction. Photo: Gabriel Oliveira

Fresh forecasts have pushed any recovery in Western Australia’s embattled home building sector out another year, while concerns have been raised about the capacity of the state’s building sector to cope with a predicted increase in activity in civil and engineering construction.

Western Australia’s Housing Industry Forecasting Group’s latest report on homebuilding predicted a flat 2019-20, with dwelling commencements expected to remain steady at 15,500, several thousand under long-term historical averages.

The forecast is a downward revision on a previous prediction of 17,000 starts, mainly due to lower than expected building approvals and finance commitments.

A subdued recovery has been tipped from 2020 through to 2022, with housing starts forecast to come in between 16,000 and 18,000 in 2021-22.

“Conditions have been softer than expected over the previous year, due to a combination of low population growth and subdued conditions in the established market where there are high levels of stock,” the HIFG said.

“Rental activity has been stable and pressure on rents has been limited, despite a falling vacancy rate. 

“The implications from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry have tightened access to finance, but the underlying issue in WA appears to be a lack of demand. 

“Reductions in interest rates have not improved demand for housing, although these have had some benefit through improvements in serviceability to secure housing finance.”

Meanwhile, a new report on WA infrastructure activity by the Civil Contractors Federation WA, the Construction Contractors Association of WA and ACIL Allen Consulting raised concern over the growing demand for skilled employees.

The report showed that the preconditions for a return to growth in WA construction had become more evident in the past year, particularly across the state’s resources sector.

Total construction activity has been forecast to increase by an average of 6.2 per cent per annum over the next four years, reaching $39.1 billion by 2022-23.

Engineering construction activity has been forecast to rise by 7.7 per cent over the period, accounting for nearly two thirds of all construction activity, the report said.

ACIL Allen executive director John Nicolaou said it was imperative for the state government to focus on the human capital needs of the construction industry, with job vacancies rising but the number of people in training at historic lows.

“Current government policy settings will limit the ability of international migration to address short-term skills needs where the supply of local labour is inadequate,” Mr Nicolaou said.

“The high competition from the eastern states for skilled construction workers – particularly skills around rail construction – is another factor affecting local supply.”

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