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Building industry underpins economic growth


Total building work done rose by 1.2% to $26.1 billion in the June quarter – well above the national economic growth rate over the same period, reinforcing the critical role the building and construction industry continues to play in supporting broader economic growth and jobs.

“Today’s release sheds light on the two speed split that exists across sectors the construction industry – and in some cases between different states. On the one hand, residential building continues to surge ahead on the back of an ongoing boom in apartments – particularly in inner city Sydney. Rising house prices in Sydney have helped shift the ‘buy versus build’ equation in the direction of new building underpinned by record low interest rates,” Wilhelm Harnisch CEO of Master Builders Australia said.

“The data shows residential building activity in NSW surged by 22% over the year-to June 2016 – accounting for over 44% of growth in the sector nationally. Overall, residential building activity grew by 0.2% to $15.1 billion, consolidating gains recorded earlier in the year,” he said.

“But the good times for Sydney’s apartment builders may soon be peaking. The commencements data for apartment buildings fell by 24.4% over the quarter and is down 13.6% over the year-to June 2016. Work underway should maintain a healthy level of activity over the short term – in Sydney at least. In a number of states activity is already beginning to show signs of weakness and prospects for the medium term are less positive,” Wilhelm Harnisch said.

“Master Builders welcomes the recent positive result for the non-residential building sector, but is cautious as to whether it marks a turning point for the sector.   Total non-residential building activity reversed the fall of 2.2% recorded in the previous March quarter, with the value of work done increasing by 2.4% to $8.9 billion,” he said.

It was another dismal quarter for engineering construction activity, down a further 9.9% on the March quarter result to $21.2 billion. Engineering construction activity has now shrunk for nine out of the last ten quarters, with the current June quarter result $13.5 billion below the peak of $34.8 billion recorded in the September quarter 2012,” Wilhelm Harnisch said.

“The data underscores the importance of getting the economic settings right for a strong economy and the need for fundamental reforms such as tax breaks for small business,” Wilhelm Harnisch said.

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