BUILDING & CONSTRUCTION Industry Forecasts AUSTRALIAN CAPITAL TERRITORY 2017 National Luxury Project Home $1 million to $2 million, Preferred Builders, Australian Capital Territory
CONTENTS Introduction... 1 Commentary... 3 Residential Building... 4 Non-Residential Building... 5 Engineering Construction... 7 Definitions... 8
Introduction INTRODUCTION M aster Builders is the peak national association for the building and construction industry in Australia. Master Builders primary role is to champion the interests of the building and construction industry, representing residential and commercial building, and engineering construction. Master Builders has more than 33,000 member companies with representation in every State and Territory in Australia, the great majority of which, by number, are small to medium sized enterprises. Master Builders membership consists of large national, international, residential and commercial builders and civil contractors through to smaller local subcontracting firms, as well as suppliers and professional industry advisers. Membership of Master Builders represents 95 per cent of all sectors of the building and construction industry. The building and construction industry is the second largest industry in Australia, accounting for around 8 per cent of Gross Domestic Product and provides jobs for more than 1 in 10 Australians in the workforce, with total employment of 1.2 million. Owner-occupied housing and other property investments account for over two-thirds of the asset portfolio and wealth of ordinary Australians. The building and construction industry is made up of approximately 370,000 businesses of which 95 per cent are small businesses and independent contractors. Combined, these small businesses employ more than 700,000 workers including 70,000 apprentices. These forecasts have been prepared in conjunction with Macromonitor Pty Ltd. Macromonitor is one of Australia s leading industry research and forecasting firms, specialising in the building and construction sector. For more information see www.masterbuilders.com.au, or send enquiries to enquiries@masterbuilders.com.au Master Builders Australia Limited, 2018. ABN 68 137 130 182 Level 3, 44 Sydney Avenue, FORREST, ACT 2603 PO Box 7170, YARRALUMLA ACT 2600 T: +61 2 6202 8888, F: +61 2 6202 8877 www.masterbuilders.com.au This document is copyright and all rights are reserved. No part of it may be reproduced, stored, transmitted or otherwise distributed, in any form or by any means without the prior written permission of the copyright holder. 1
Introduction 2
Australian Capital Territory - Commentary ACT COMMENTARY Housing Market is the Tightest in the Country R eleased in May, the 2018 Budget was light on spending cuts and strong on new government programs, meaning more jobs for the ACT and more good news for the local economy. In 2016-17 the ACT economy was the fastest growing in the country. The official statistics are yet to be released but 2017-18 is shaping to be an even better year. The labour market is sprinting, unemployment is the lowest of any state or territory and employment growth in 2018 is expected to be upwards of 3.5 per cent a full percentage point higher than the national average. Better still jobs growth is in high skilled and high paying jobs in cyber security, defence and intelligence, and private, government servicing consultancies. The latter has meant the rental market in the ACT is the tightest in the country. Vacancy rates are 0.5 per cent and the price of an average 3 bedroom rental is about $100 per week higher than in Melbourne. Rental growth was 5.9 per cent last year which is more than double the growth in average wages. As a result housing affordability is perhaps a bigger issue in the ACT than in most other jurisdictions. Regulatory constraints which limit new housing supply and push up land costs are the biggest impediment to improving housing affordability in the ACT. There is speculation that there may be an oversupply of apartments in the ACT market. In part, this may be true it is likely that 2 bedroom apartments have featured too heavily in the composition of new supply. The latter should be a consideration for planners. But with rents rising faster than all other capital cities besides Hobart and vacancy rates near zero, the underlying market fundaments do suggest supply is still very constrained. The value of new residential building work increased by 22.8 per cent in 2017 and is expected to grow by a further 3.7 per cent in 2018. This should take some pressure off living costs, but with population growth running hot it is important that this momentum is maintained. The forecasts for new dwelling starts in 2019 project a fall of around 12.4 per cent (equal to around 600 new dwellings). Without a boost to the pipeline soon, there is a risk that the approaching downturn in new housing supply will put unwanted upward pressure on housing affordability. Engineering construction lifted by over 25 per cent in 2017. However, this was pretty much all due to one project the $700 million Capital Metro project. The latter is the largest single engineering project ever undertaken by the ACT Government. This project accounts for more than $3 in every $4 of projects planned and under construction in the ACT engineering sector. There is however some speculation that other works are being crowded out, with proposed projects like the new Civic Stadium being pushed back. Non-residential building is also slated to record one of the strongest years in terms of growth in 2018. Building approvals have almost doubled in the past year, which should eventually flow through to more future work. In terms of project activity, construction on the $220 million Union Court Revitalisation at the Australian National University was interrupted by flooding in late February. ACT FORECASTS Year Ended June 2017-18 2018-19 2019-20 2020-21 2021-22 Number Commenced: Residential Building 5,367 4,700 4,394 4,518 4,378 %ch 11.7% -12.4% -6.5% 2.8% -3.1% Value of Work Done: $M, chain volume measures, constant 2015/16 prices Total Building & Construction 3,952 3,762 3,333 3,266 3,338 %ch 14.9% -4.8% -11.4% -2.0% 2.2% Residential Building 1,664 1,642 1,570 1,554 1,569 %ch 3.7% -1.3% -4.4% -1.0% 1.0% Non-Residential Building 1,234 1,220 974 930 1,089 %ch 38.1% -1.2% -20.2% -4.5% 17.1% Engineering Construction 1,054 901 788 783 679 %ch 11.9% -14.5% -12.4% -0.7% -13.2% Source: Master Builders Australia, Macromonitor, ABS data. 3
Australian Capital Territory Graphs & Tables Residential Building ACT GRAPHS & TABLES RESIDENTIAL BUILDING AUSTRALIAN CAPITAL TERRITORY RESIDENTIAL BUILDING WORK DONE BY SECTOR $M, chain volume measures, constant 2015/16 prices Year Ended June 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Residential Building 1,169 1,442 1,551 1,467 1,335 1,407 1,307 1,605 1,664 1,642 1,570 1,554 1,569 %ch 38.2% 23.3% 7.6% -5.4% -9.0% 5.4% -7.1% 22.8% 3.7% -1.3% -4.4% -1.0% 1.0% Houses 558 576 516 594 534 543 396 436 418 442 479 515 515 %ch 42.1% 3.1% -10.4% 15.1% -10.0% 1.7% -27.0% 9.9% -4.2% 5.8% 8.3% 7.5% 0.2% Other Dwellings 469 701 887 732 678 737 776 1,045 1,123 1,075 966 913 926 %ch 39.6% 49.5% 26.5% -17.4% -7.4% 8.7% 5.3% 34.6% 7.4% -4.2% -10.2% -5.5% 1.5% Alterations & Additions 135 161 150 138 120 125 134 124 124 125 126 126 127 %ch 20.7% 19.5% -7.1% -7.7% -13.2% 4.0% 7.4% -7.4% -0.4% 0.7% 0.7% 0.7% 0.7% Source: Master Builders Australia, Macromonitor, ABS data. AUSTRALIAN CAPITAL TERRITORY RESIDENTIAL BUILDING WORK DONE BY SECTOR $M, chain volume measures, constant 2015/16 prices Year Ended June AUSTRALIAN CAPITAL TERRITORY NUMBER OF DWELLING COMMENCEMENTS BY SECTOR Year Ended June 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Residential Building 4,425 5,106 4,595 4,499 4,235 4,052 5,073 4,803 5,367 4,700 4,394 4,518 4,378 %ch 67.6% 15.4% -10.0% -2.1% -5.9% -4.3% 25.2% -5.3% 11.7% -12.4% -6.5% 2.8% -3.1% Houses 2,203 1,869 1,696 1,872 1,616 1,538 1,031 1,143 1,046 1,116 1,191 1,263 1,209 %ch 66.1% -15.2% -9.3% 10.4% -13.7% -4.8% -33.0% 10.9% -8.5% 6.7% 6.8% 6.0% -4.2% Other Dwellings 2,222 3,237 2,899 2,627 2,619 2,514 4,042 3,660 4,321 3,584 3,203 3,255 3,169 %ch 69.1% 45.7% -10.4% -9.4% -0.3% -4.0% 60.8% -9.5% 18.1% -17.0% -10.6% 1.6% -2.7% Source: Master Builders Australia, Macromonitor, ABS data. AUSTRALIAN CAPITAL TERRITORY NUMBER OF DWELLING COMMENCEMENTS BY SECTOR Year Ended June 4
Australian Capital Territory Graphs & Tables Non-Residential Building ACT GRAPHS & TABLES NON-RESIDENTIAL BUILDING AUSTRALIAN CAPITAL TERRITORY NON-RESIDENTIAL BUILDING WORK DONE BY SECTOR $M, chain volume measures, constant 2015/16 prices Year Ended June 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Non-Residential Building 1,395 1,404 1,345 1,041 735 791 912 894 1,234 1,220 974 930 1,089 %ch 5.7% 0.6% -4.2% -22.6% -29.4% 7.7% 15.2% -2.0% 38.1% -1.2% -20.2% -4.5% 17.1% Retail & wholesale trade 54 155 161 69 79 116 168 124 148 127 121 122 112 %ch -37.8% 186.0% 3.9% -56.9% 14.3% 46.6% 44.1% -26.3% 19.8% -14.4% -4.9% 1.4% -8.5% Transport buildings 161 94 40 81 23 33 31 24 21 23 24 25 22 %ch 403.5% -41.9% -57.0% 102.1% -72.1% 46.5% -7.3% -20.6% -12.4% 7.1% 2.8% 4.4% -10.5% Offices 660 514 584 330 244 172 179 198 290 290 229 186 197 %ch -11.5% -22.1% 13.5% -43.4% -26.0% -29.4% 3.7% 10.8% 46.5% 0.1% -21.2% -18.7% 5.8% Other commercial %ch Factories 3 2 5 2 3 1 4 10 3 3 2 1 1 %ch 196.2% -24.8% 150.4% -68.1% 101.2% -79.6% 395.8% 181.9% -72.4% 8.2% -46.8% -5.5% -7.7% Warehouses 28 52 35 38 36 32 25 17 142 63 40 32 23 %ch -33.2% 81.6% -32.5% 10.8% -6.2% -11.6% -20.8% -33.1% 738.7% -55.3% -37.0% -20.4% -27.7% Agriculture and aquaculture %ch Other industrial %ch Education 364 436 253 238 125 148 181 163 313 413 290 197 197 %ch 87.3% 20.0% -42.0% -6.2% -47.6% 19.1% 22.2% -9.8% 91.7% 31.9% -29.7% -32.2% -0.1% Religion 7 3 3 3 6 3 5 3 23 5 2 2 2 %ch 615.9% -58.6% -8.9% -2.9% 117.4% -52.8% 78.1% -39.3% 720.9% -79.3% -57.8% 12.5% 0.0% Aged care facilities 4 6 17 15 21 42 41 26 17 44 24 22 22 %ch -92.6% 78.8% 163.2% -11.7% 42.9% 99.3% -1.4% -36.6% -33.9% 155.5% -45.4% -9.0% 0.8% Health facilities (non-aged care) 30 35 139 125 85 33 102 162 57 18 36 123 306 %ch 68.9% 13.7% 302.1% -10.0% -31.9% -60.6% 203.6% 59.6% -64.7% -69.3% 106.4% 239.6% 148.6% Entertainment & Recreation 52 30 33 37 34 36 46 65 108 77 79 67 71 %ch -47.0% -43.3% 10.8% 11.9% -8.7% 8.3% 25.6% 42.4% 65.9% -29.2% 3.4% -15.4% 6.0% Accommodation 20 34 44 64 29 74 21 28 52 126 82 83 60 %ch 428.8% 67.3% 30.2% 44.3% -54.0% 151.9% -71.1% 30.1% 85.5% 143.2% -34.4% 1.0% -27.5% Other non-residential 11 41 30 38 50 96 91 67 53 20 43 67 74 %ch -77.2% 288.5% -25.4% 24.8% 30.1% 94.3% -5.4% -26.1% -21.5% -61.2% 112.3% 54.9% 10.1% Source: Master Builders Australia, Macromonitor, ABS data. 5
Australian Capital Territory Graphs & Tables Non-Residential Building AUSTRALIAN CAPITAL TERRITORY NON-RESIDENTIAL BUILDING WORK DONE BY SECTOR $M, chain volume measures, constant 2015/16 prices Year Ended June 6
Australian Capital Territory Graphs & Tables Engineering Construction ACT GRAPHS & TABLES ENGINEERING CONSTRUCTION AUSTRALIAN CAPITAL TERRITORY ENGINEERING CONSTRUCTION WORK DONE BY SECTOR $M, chain volume measures, constant 2015/16 prices Year Ended June 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Engineering Construction 548 871 901 910 920 697 712 942 1,054 901 788 783 679 %ch 21.6% 58.9% 3.4% 1.0% 1.1% -24.2% 2.0% 32.3% 11.9% -14.5% -12.4% -0.7% -13.2% Transport 117 268 236 302 282 288 175 331 399 328 371 379 278 %ch -15.4% 130.2% -12.2% 28.4% -6.7% 2.0% -39.3% 89.5% 20.5% -17.9% 13.3% 2.0% -26.6% Utilities 405 572 608 492 526 358 445 486 467 416 354 342 338 %ch 53.2% 41.1% 6.2% -19.1% 7.0% -32.0% 24.4% 9.1% -3.7% -11.1% -14.9% -3.4% -1.0% Resources %ch Other 26 30 58 115 109 51 92 125 187 157 63 62 63 %ch -46.0% 15.5% 90.2% 99.6% -4.8% -53.6% 80.5% 36.1% 49.9% -16.1% -59.7% -1.3% 1.1% Source: Master Builders Australia, Macromonitor, ABS data. AUSTRALIAN CAPITAL TERRITORY ENGINEERING CONSTRUCTION WORK DONE BY SECTOR $M, chain volume measures, constant 2015/16 prices Year Ended June 7
Definitions ABS SECTORS Residential Building Houses Other dwellings Alterations and Additions A house is a detached building predominantly used for long-term residential purposes and consisting of only one dwelling unit. Thus, detached 'granny flats' and detached dwelling units (such as caretakers' residences) associated with non-residential buildings are defined as houses for the purpose of these statistics. A building other than a house primarily used for long-term residential purposes and which contains (or has attached to it) more than one dwelling unit (e.g. includes blocks of flats, home units, attached townhouses, semi-detached houses, maisonettes, duplexes, apartment buildings, etc.). Building activity carried out on existing buildings. Includes adding to or diminishing floor area, altering the structural design of a building and affixing rigid components which are integral to the functioning of the building. Non-residential building Non-residential building Retail & wholesale trade Transport buildings Offices Other commercial Factories Warehouses Agriculture and aquaculture Other industrial Education Religion Aged care facilities Health facilities (non-aged care) A non-residential building is primarily intended for purposes other than long term residential purposes Buildings primarily used in the sale of goods to intermediate and end users. Buildings primarily used in the provision of transport services, and includes the following categories: Passenger transport buildings (e.g. passenger terminals), Non-passenger transport buildings (e.g. freight terminals), Commercial car parks (excluded are those built as part of, and intended to service, other distinct building developments), Other transport buildings n.e.c. Buildings primarily used in the provision of professional services or public administration (e.g. offices, insurance or finance buildings). Building not included in commercial categories above. Buildings housing, or associated with, production and assembly processes of intermediate and final goods. Buildings primarily used for storage of goods, excluding produce storage. Buildings housing, or associated with, agriculture and aquaculture activities, including bulk storage of produce (e.g. shearing shed, grain silo, shearers quarters). Building not included in industrial categories listed above. Buildings used in the provision or support of educational services, including group accommodation buildings (e.g. classrooms, school canteens, dormitories). Buildings used for or associated with worship, or in support of programs sponsored by religious bodies (e.g. church, temple, church hall, dormitories). Building used in the provision or support of aged care facilities, excluding dwellings (e.g. retirement villages). Includes aged care facilities with and without medical care. Buildings used in the provision of non-aged care medical services (e.g. nurses quarters, laboratories, clinics). Entertainment & Recreation Accommodation Other non-residential Engineering Construction Transport Utilities Resources Other engineering construction Buildings used in the provision of entertainment and recreational facilities or services (e.g. libraries, museums, casinos, sporting facilities). Buildings primarily providing short-term or temporary accommodation, and includes the following categories: Self-contained, short term apartments (e.g. serviced apartments), Hotels (predominantly accommodation), motels, boarding houses, cabins, Other short term accommodation n.e.c. (e.g. migrant hostels, youth hostels, lodges). Building not included in categories listed above. Includes roads, bridges, railways, harbours Includes water, wastewater, electricity, gas pipelines, telecommunications Includes oil, gas and other hydrocarbons; bauxite, alumina and aluminium; coal and coal handling; other minerals and heavy industry. Construction of facilities not involved in categories listed above. Disclaimer While every care has been taken in preparing this document, Master Builders Australia will not accept responsibility for actions taken in reliance upon information contained in this document. The forecasts presented in this publication were developed. The forecasts presented in this publication are subject to unavoidable statistical variation. While all care has been taken to ensure that the statistical variation is kept to a minimum, care should be taken whenever using this information. The interpretation and conclusions presented in this publication are those of the author(s). 8
Master Builders Australia Level 3, 44 Sydney Avenue FORREST ACT 2603 PO Box 7170, YARRALUMLA ACT 2600 T: 02 6202 8888, f: 02 6202 8877 E: enquiries@masterbuilders.com.au W: masterbuilders.com.au