Teven Road Interchange
Recent statistics indicate that conditions remain strong in the NSW construction market.
The total value of all building work done in the September quarter of 2010 amounted to $5.464 billion, according to figures from the Australian Bureau of Statistics (ABS). This is down slightly from June’s peak ($5.647 billion), but still up a healthy 26.83% on the $4.308 billion recorded in September 2009 (see chart below).
The national figure, by contrast, was up 18.3% on a year earlier.
The residential sector continued to perform well. Buoyed by demand resulting from the boost to the First Home Owners Grant (FHOG) last year, the total value of work done in residential construction activity in the September quarter was up 19.44% from a year ago. This is consistent with national trends – the total level of activity throughout Australia was up 18.3% over the same period.
Conditions in the non-residential sector, as well, remain robust. The total value of all non-residential construction work done in the September quarter was up 36% on a year earlier, outstripping the 27% gains nationally over the same period. As with other states, these figures are underpinned by activity on public sector projects resulting from the National Building Economic Stimulus Plan, with the value of work done on educational facilities ($1.019 billion) up more than fourfold over levels experienced prior to the stimulus.
Engineering construction activity was soft in September quarter, but the sector does have a strong order book (see below). The total value of in engineering construction activity in the September quarter ($3.794 billion) was down 14.82% from June and 5.29% on the figure for September 2009.
Good times ahead
Forward indicators look promising, even as the effects of stimulus spending and the FHOG subside.
Buoyed by the approval of a $197 million residential complex at Rhodes, dwelling approvals jumped more than 30% in December to $906.4 million – a higher level than that recorded at any other time in 2010. Industry research firm BIS Shrapnel expect approvals to grow by 3% during 2010-11 (a respectable figure given that many purchases were bought forward in 2009 due to the boost to the FHOG in that year) and by a significant 21% in 2011-12. BIS cites “substantial rezoning and lots of subdivisions” as the reasoning behind these rosy forecasts.
Signs are also promising in the non-residential sector. In spite of the waning of the boost from the stimulus plan, approvals in this sector ($409.9 million in December) are at their highest point since last June. Helped along by the approval of a concept plan for a 31 storey commercial and retail development on the Pacific Highway in North Sydney, approvals in the retail and commercial office sectors ($152.9 million and $117.3 million) bounced back strongly in December after lean periods throughout spring.
Finally, the outlook for engineering construction is encouraging. The total value of work yet to be done as at September 30 stood at $7.68 billion, the highest level since June 2008. Powered by major projects, such as the ongoing Pacific Highway upgrade, the value of work yet to be done for construction of roads stood at $2.876 billion – almost double the March figure ($1.541 billion). The figure relating to electricity and power projects, also ($984 million), is at its highest level since December 2008. Lastly, activity related to healthcare facilities should get a boost from last week’s approval of the $600 million construction of the Northern Beaches Hospital.
