Green shoots for besieged construction sector

New data released today shows much welcome green shoots for Australia’s battered property and construction industry despite ongoing challenges, according to RSM Australia.

New Building Activity data, released by the Australian Bureau of Statistics, showed strong momentum with dwelling commencements surging to 11.7 per cent to reach 47,645 in seasonally adjusted terms, while total dwellings completed fall 4.4 per cent to 43,517. 

RSM Australia National Real Estate & Construction Lead Adam Crowley said the figures reflect increasing confidence and sentiment across the sector.

“Today’s data is consistent with what we’re hearing from our clients – sentiment and confidence is starting to improve across the sector,” Mr Crowley said.

“Improved access to finance, accelerated planning approvals and increased investor participation have all contributed to the strong rebound in private sector other residential commencements.

“Critically, the surge in commencements moves Australia closer towards the target of building 1.2 million homes over five years. 

“While still below the target average of 60,000 homes per quarter, the 47,645 commencements for the March quarter represents meaningful progress and will hopefully contribute to replenishing Australia’s dwelling supply pipeline – key in addressing the ongoing housing shortage.”

“As capital continues to come down and developers gain more confidence that their finished product will maintain value, we expect to see this optimistic sentiment grow among the industry.

“We’ll be closely watching the next release to validate that this upswing isn’t just a one-off bounce but part of an emerging recovery trajectory.”

RSM Australia Economist Devika Shivadekar says the mixed performance reflects an industry that is still grappling with cost of business issues.

“While the sector is successfully initiating new projects and maintaining strong commencement activity, it’s clear the industry is still battling completion timelines,” Ms Shivadekar said.

“This is likely influenced by ongoing supply chain and labour market dynamics affecting the industry’s ability to finish projects at pace.

“Despite these completion challenges, the pipeline remained substantial with 219,883 total dwellings under construction at the end of March.”

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