Construction in aged care and religion-related buildings can expect strong uptake despite a neutral overall outlook for the non-residential construction sector, according to the spring 2015 Construction Monitor report by Australian Construction Insights (ACI).
The short term outlook is reasonably healthy for agricultural and aquaculture buildings, health, entertainment and recreation, and short term accommodation. Warehouses, factories and other secondary production buildings can expect a neutral performance in the short term, while retail, offices and transport buildings will weaken.
Aged care buildings in particular are seeing excellent growth, benefiting from a “demographic wave” leading to a strong pipeline of work likely to be sustained. The value of work yet to be done in this category of building was worth $1.29 billion at the end of the March 2015 quarter.
Religion buildings are a surprising new category seeing strength, with approved work up 27.4% in June compared to the same time last year, plus a $108.4 million pipeline from the end of March 2015 – a relatively strong pipeline for religion buildings.
Though representing a smaller sector, agricultural and aquaculture buildings are seeing strong growth, with work more than doubling (up by 183.5 per cent) the values recorded in the 2014 June quarter.
Meanwhile ABS Building Approvals, along with and Housing Industry Association/ACI New Home Sales have signalled further healthy new residential construction activity for 2015/16, resulting in four years of consecutive growth.
In a state by state analysis, the ACI Construction Monitor report indicates that New South Wales, Victoria, the Northern Territory and surprisingly Tasmania are prospering, with strong levels of non-residential construction, while Queensland, Western Australia, South Australia and the Australian Capital Territory are experiencing lower levels of activity than previous years.
“In terms of geography, the latest state rankings appear to have adopted the social order of an old world manor house, with a clear demarcation between upstairs and downstairs,” said ACI Economist, Geordan Murray.
“New South Wales, Victoria, Tasmania and the Northern Territory are enjoying the prosperity upstairs, while Queensland, Western Australia, South Australia and the Australian Capital Territory are living rough downstairs.”
On Tasmania’s new uptake in non-residential activity now narrowly ahead of NSW’s and sitting next to Vic and the NT, Murray said time will tell whether this is “is just a flash in the pan or the beginning of a sustained recovery”.
The ongoing strength of the two largest states is the most economically significant development, as both states are marked as having a strengthening non-residential construction outlook.
“While the outright rankings of NSW and Vic are arguably skewed by the volatility of activity in the minnow jurisdictions, non-residential construction conditions in both states improved when compared to the winter 2015 Construction Monitor,” said Murray.
Meanwhile, construction work associated with the mining sector continues to ease back from the peak.
“This took a toll on WA’s ranking which slipped to last place in this edition,” said Murray.
“While there is still a large amount of construction activity occurring in WA at present, it is well down on the levels the state had become accustomed to over the last few years.”