Residential building boom reaches crescendo

The boom in residential building activity is reaching a high point, with key indicators showing that residential builders in the south eastern states are enjoying near pre-GFC conditions, according to Master Builders’ National Survey of Building and Construction

“Business confidence continued to improve in the June quarter, recording an index score of 60, the most positive result since June 2015 – an index score over 50 is positive, while a score of below 50 is considered a negative result,” said Matthew Pollock, Master Builders Australia’s national manager for economics and industry. 

“Despite some choppy results in the building activity data in the non-residential sector, the index for future expectations remains [positively] supported by a healthy pipeline of work,” Pollock said. “This peak in confidence is a product of a very healthy construction sector, particularly in the south eastern states where a housing boom has produced a record level of new housing construction over the past two years.”   

However, this may turn out to be the peak in confidence, as falling building approvals and a moderation in Sydney and Melbourne’s house prices in recent months suggest that the south eastern capitals are about to enter a softer period.

“Current conditions in the residential sector are at a peak. Indeed, financial year 2017 is expected to add a third straight year where new housing commencements surpassed 200,000. As a result the index for residential builder’s current conditions was recorded at 61.8 in the quarter, the best result in over two years,” Pollock said. “But the divide between current and future expected activity is growing, with an index of 52.0 recorded for future expectation for activity in the residential sector.”

The reintroduction of the Australian Building and Construction Commission (ABCC) has also given commercial builders a new wave of confidence, Pollock added.  as the watchdog restores the balance to building sites across the country.