Business

Construction confidence grows

Master Builders director of housing policy Paul Bidwell said the latest report highlights rising confidence for the fourth quarter in a row.
Master Builders director of housing policy Paul Bidwell said the latest report highlights rising confidence for the fourth quarter in a row. john mccutcheon

CONFIDENCE in the outlook for the Queensland building industry and the Queensland economy continued to grow during the March quarter, according to the March 2012 Survey of Industry Conditions report released by Master Builders on Tuesday.

Master Builders director of housing policy Paul Bidwell said the latest report highlights rising confidence for the fourth quarter in a row.

"We believe a range of factors have contributed to this improvement, with relatively stable interest rates and speculation of further rate cuts in 2012 at the top of the list," Mr Bidwell said.

"Positive media commentary regarding domestic and global economies and the landslide Queensland state election result have also played a role.

"While this continued growth in optimism is welcome, as it makes businesses more likely to spend, hire and invest, it is unfortunately not matched by an improvement in trading conditions during the March quarter.

"In the three months to March conditions in the residential and commercial sectors weakened. Turnover and profitability were both down, along with work in progress and average contract prices.

"The industry is optimistic that a gradual recovery is under way but, unfortunately, many businesses are not seeing any meaningful improvement in their individual circumstances, even in the regions where the resources sector is booming."

"The boom is yet to have any significant impact on many residential and commercial builders.

"Not surprisingly, the most critical constraint on business growth was the lacklustre level of demand, with the same list of usual suspects contributing to the softness in demand - weak consumer confidence, the two-speed domestic economy, the ongoing concerns about a possible second GFC, stagnant/falling house prices, the looming introduction of the carbon tax and housing affordability."

Report highlights include:

  • Businesses are increasingly confident that the industry is now entering the recovery phase. Consistent with that view, the Profitability and Turnover Indexes are forecast to increase over the next three months.
  • The majority of businesses expect their staffing and apprentice levels to stabilise in the short term.
  • Wages growth is only a problem in Central Queensland and Mackay, as a result of the resources boom.
  • Low affordability continued to dampen new housing demand, with the vast majority of respondents (86%) of the view that low affordability was having a negative impact on new housing demand.
  • The outlook for housing affordability is expected to improve slightly over the next 12 months thanks to the softening of house prices in some areas of the state.

Topics:  construction industry, master builders association, paul bidwell


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