Building industry confidence rising but fragile

PROPERTY

Confidence in the Queensland building industry is on the rise, but it is only just on the verge of recovery and remains fragile. That’s the finding of the latest survey of industry conditions from Master Builders, Queensland’s peak body for housing and construction.
Master Builders’ director of housing policy, Paul Bidwell, said the report covering the March 2010 quarter shows that conditions in the residential and commercial sectors were still less than ideal.
“And [the recent] decision by the Reserve Bank of Australia to raise interest rates for the second consecutive time, is undoubtedly a setback,” he said.
“Despite poor conditions in the first three months of 2010, the outlook is for conditions to improve over the coming months. However, in order for market conditions to stabilise, the industry needs some breathing space.
“The interest rate rise, and any further increases in the short term, will dampen demand and make it more difficult for the recovery to take hold.
“It is also clear that the recovery is currently two-speed, with the commercial sector lagging behind the residential market. In fact, without government stimulus spending, the commercial sector would be on its knees.
“Aside from a lack of demand, the other two key constraints to business growth within the industry, are the planning approval process and the availability and cost of finance.
“At a regional level, the survey results indicate substantial differences in the industry’s performance across the state. “The Darling Downs, South-West Queensland and Central Queensland are the stand-out regions, reflecting the strength of their local economies.
“In sharp contrast, the Gold Coast and Far North Queensland are still battling the effects of the global financial crisis.
“The key business constraints in each region are largely consistent with the state-wide results. Interestingly, however, the better performing regions face a different set of constraints with the availability of finance, the planning approval process, infrastructure charges and labour costs rated as more critical constraints in these regions."
The report also highlights that housing affordability continues to be a major concern in all regions. Unfortunately, the outlook for housing affordability is bleak, with the majority of businesses expecting affordability to worsen over the coming 12 months.
“On a positive note, news that the unemployment rate in Queensland has ticked down slightly is a very positive step towards increasing confidence amongst those contemplating buying a new or existing home. This news will be welcomed in those parts of the state where the building and construction industry is languishing, particularly the Gold Coast and Far North Queensland.”

• The Master Builders Survey of Industry Conditions report is one of a series of industry and economic reports Master Builders produces for the building and construction sectors. For copies of the state and regional reports, visit www.masterbuilders.asn.au and click on ‘Publications’ and ‘Housing industry reports’.