Building company failures, job losses in huge construction slowdown
The value of construction projects across SA are forecast to plummet over the next five years with $3.5 billion expected to be stripped from the sector — leading to more builder failures and job losses.
More company failures and job losses are feared across the state’s construction industry, with the latest industry forecasts predicting more than $3.5 billion could be stripped from the sector in the next five years.
The Master Builders Association has released its latest industry forecast, pointing to a massive decline in residential projects, commercial building and civil and engineering construction.
After peaking at $12.5 billion last financial year, the value of construction projects across the state is expected to fall each year over the next five years, plummeting to just $8.9 billion by 2023-2024.
The housing sector is expected to come under particular strain, with the number of new homes tipped to fall from a high of 13,005 in 2017-2018 to less than 8400 in 2023-2024.
The predicted slide represents a $800 million fall in annual residential building activity.
Master Builders Association (MBA) SA chief executive Ian Markos blamed the state’s planning regime, unaffordable housing and the State Government’s planned land tax changes for the dire prediction.
“This forecast is a wake-up call for the whole state,” he said.
“You can’t have a strong economy without a strong building and construction industry.
“And we are talking about Australia’s second largest industry, one that directly employs more than 70,000 South Australians.
“Risky changes to land tax will further threaten housing affordability and are the last thing needed right now.
“Nine builders have gone under since November, and whilst none were Master Builders members, the flow on effects to our subcontractors have been brutal. Many have been left severely out of pocket.
“We urge the Marshall Government to take immediate action to improve affordability or there may be more to come.”
To unlock investment in new housing, the MBA has renewed calls for action on its five-point housing plan, which includes delivering stamp duty exemptions to first homebuyers of new builds, offering more generous first home owner grants in regional areas and implementing sensible changes to the state’s planning and design code, which are due to be released for consultation later this year.
“The solution is all about improving the macro environment - policies that improve affordability, encourage investment and protect jobs,” Mr Markos said.
“The government needs to have the courage to say no to the bureaucrats that are forcing ever increasing red and green tape on the industry and making housing affordability a thing of the past.”
According to the MBA’s industry forecast, apartment and unit construction in SA is expected to continue its recent decline, forecast to fall from a high of 4801 new units in 2017-18 to just 2346 in 2023-24.
Detached housing is expected to fall from 8204 new homes to 6050 over the same time period.
While the commercial building market has been stronger in recent years, it’s expected to peak at $3 billion worth of work this financial year before dropping to just $2.1 billion in 2023-24.
Civil and engineering projects, hit by a forecast decline in major transport infrastructure work, are expected to fall to $4.2 billion by 2023-24, down from a high of $6.4 billion last financial year.
Treasurer Rob Lucas said the State Government’s housing stimulus package, announced in the June budget, would go some way to easing pressure in the market, but ruled out further financial stimulus in the short term.
“The housing stimulus package was in recognition of the challenges in the housing market,” he said.
“We’re in furious agreement and very happy to work with the MBA in reducing red tape and green tape.
“But the $2.1 billion writedown in GST revenue means we don’t have the money to afford first home owner grants or stamp duty concessions.”