eco n o m y
CONSTRUCTION IS
THE POWERHOUSE OF
AUSTRALIA’S ECONOMY
It is all about construction. All three analyses
signal New South Wales and Victoria as the
kingmakers - that would not be the case
without housing as the star driver.
HARLEY DALE
Chief Economist
HIA Economics &
Australian Construction Insights
F
rom humble beginnings in 2012, new
home construction has become the
powerhouse of Australia’s economy.
It started with Western Australia and New
South Wales, with a very healthy Victorian
market always part of the mix. As the years
ticked along, New South Wales and Victoria
became the stars, and the southeast corner
of Queensland still has more to offer.
Australia’s three premier guides to current
conditions and future prospects for the
construction industry are; the CommSec
State of the States Report, the HIA Housing
Scorecard, and the ACI Constuction
Monitor.
28 Australian Window Association
The national new housing commencements
cycle may have peaked, but there is a very
long tail - detached and semi-detached
housing is at historically high levels; plus
medium/high density dwellings have a near
record level of approvals yet to be started.
whole) and South Australia provide ready
testament to.
Overall though, housing is king. It was
always going to take a long period of time
for the Australian economy to adjust to
the post-mining boom era. Thanks largely
to the record cycle in the new residential
construction sector, as a nation we have
avoided recession or even teetering on the
brink of such a destructive outcome.
There were nearly 230,000 new dwelling
commencements in the year to March 2016!
That’s a new record. In 2016/17, opportunities
still abound. Detached housing is running
at levels considerably above the long term
average and the short term outlook is for
activity to track sideways at around current
levels. Commencements of ‘multi-units’ are
at record levels – driven by the medium/high
density sub sector, but parts of the semidetached market still have some punch left.
The key uncertainty ahead is how much of
the medium/high density approvals pipeline
gets converted into starts – we are in
uncharted territory in that regard.
One focus that has been lost along the
way is that opportunities have continued
to gather steam within a weaker aggregate
picture of engineering construction, while
non-residential building has held up much
better than often suggested. In short, the
non-residential construction industry has
some life to it.
Geographical divergences are important, as
well as the composition of what we build.
There is no single ‘record’ level of new home
building, as states like Queensland (as a
First launched a year ago, the fifth (winter
2016) edition of the ACI Construction
Monitor highlights a number of opportunities
within the non-residential construction
Highlighting that point through detailed
analysis and forecasts was the purpose of
the quarterly Construction Monitor, the
flagship report of Australian Construction
Insights (ACI) – the consultancy arm of HIA
Economics.