South Australian construction sector to hit $13bn in 2018/19 but Master Builders warns of downturn
SOUTH Australia’s construction sector is expected to deliver a whopping $13 billion in projects this financial year but we need to keep building on good times.
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SOUTH Australia’s construction sector is expected to deliver a whopping $13 billion in projects this financial year but that value will fall sharply unless more projects come on stream, economic modelling has predicted.
A construction industry forecast to be released by the Master Builders Association of SA today predicts total investment across SA — including residential, commercial, civil and engineering — will increase by $1 billion to $13 billion this financial year.
But the picture is bleaker beyond 2019 with the value of construction work anticipated to fall every year through to 2022 wiping out nearly $3 billion from the sector, the industry forecast predicts.
The anticipated downturn has been attributed to a slowdown across all construction sectors with the MBA making particular note of a slowing residential sector, which it attributes to a softening apartment market.
“The pace of residential building is expected pick up in 2018 but moderate thereafter,” the report, a with macromonitor says.
“There are still a number of large apartment projects underway which are a big boost to
activity.
“However, the majority of work underway is expected to wrap up by the end of the year and the value of projects in planning is much lower.
“Unless more projects enter the pipeline soon, the value of residential construction is likely to fall looking into 2019 and beyond.”
The report is forecasting that construction will start 10,929 homes this financial year — 1000 fewer than the preceding 12 months — and that number will decrease year on year with 7921 new homes to start construction in the 2021-22 financial year.
The fall will represent a drop of $809 million in residential construction activity over the next four years.
The value of commercial construction is expected to increase by $800 million this financial year to $3.2 billion before sliding to $2.02 billion by the end of 2022.
MBA SA policy manager Will Frogley said business confidence in SA is on the rise but that the cost of doing business must be reduced.
“Many of the structural problems with the economy that have held the state back are still around, and the forecast shows that the recovery will be short-lived without the right policy settings,” he said.
“South Australia should be known as the least regulated state in the country and the Marshall Government’s Productivity Commission could play a big role in achieving that.
“A strong pipeline of transport, health and education infrastructure must be maintained to create jobs and improve the lives of South Australian people, communities and businesses.
He said SA’s sluggish population growth was a big reason for the forecast decline in residential building activity.
“Residential building is coming off a record high. There has been an apartment boom due to incentives such as off-the-plan concessions and Adelaide City Council’s ‘five year rates holiday’ to new owner occupiers,” he said.
“However, building approvals for private sector houses have declined for seven consecutive months. It’s clear that reforms are needed to stimulate the market and protect jobs in the industry.”
The MBA reiterated abolition of a stamp duty exemption for first homebuyers on properties valued up to the median house price.