Reasonably strong conditions in the market for home renovations in Queensland are set to continue and the overall housing industry is set for a significant recovery in 2013/14, a building and construction industry organisation says.
In its October 2012 Outlook, the Queensland Master Builders Association says that following a disappointing year in 2011/12, where new housing starts throughout the state came in at just 26,311, growth of a modest 7.7 per cent will take place in the current financial year. Next year, the association predicts a more respectable level of 32,000 housing starts in 2013/14 as a 14.3 per cent surge takes hold that year.
Master Builders director of housing policy Paul Bidwell says the increase will be driven by a number of factors, including an anticipated improvement in household and business confidence, and will be centred around detached houses and low-rise attached dwellings as tough financial conditions continue to hold back large multi-residential projects.
“We are surprised that consumer confidence has not improved already,” Bidwell says. “There are a number of significant positive influences, including low interest rates, the recently announced First Home Owners Construction Grant and continued population and employment growth, all of which [are expected to] help to fuel demand for new dwellings.”
Bidwell says Master Builders also expects an already solid renovations market, which saw a total of 48,459 renovations above an insurable value of $3,300 in 2011/12 at an average cost of $37,500, to improve in line with employment growth and rising household income.
“We anticipate the renovation market will also remain solid in 2012–13, with stagnant house prices encouraging home owners to renovate rather than upgrade to a new home,” he says, adding that kitchens and bathroom renovations are likely to remain popular as they add value and make homes more liveable.
Outside of residential construction, however, Master Builders says it expects conditions to remain tough in commercial building amid difficult financing conditions, limited appetite for risk and a wind-down in public sector work, with the worst hit sectors including retail, industrial, new office buildings, hospitality/accommodation and high-rise apartments.
As a result, competition for the limited pool of available work will remain fierce, with firms continuing to slash margins in order to win contracts – a situation Master Builders warns is unsustainable in the long term.
The one bright spot in commercial building is health care, which is set to benefit from work on the Sunshine Coast University Hospital.
The latest forecasts mirror earlier forecasts for the state from Australian Construction Industry Forum (ACIF), which expects continued strong civil construction activity due to high levels of investment in gas and minerals projects, a return to housing growth in 2013/14 and flat non-residential construction apart from healthcare.