According to the latest figures from the Australian Bureau of Statistics (ABS), the value of seasonally adjusted building approvals surged 32.6% in August to come in at $949.5 million.
Granted, July’s figures were low, and so the improvement in August when compared with July overstates the strength of the August result. Moreover, at $10.236 billion, the total value of building approved in the twelve months to August is less than the current annual levels of building activity ($11.980 billion), meaning that new work is not coming in as fast as existing work is being done.
Still, things do appear to be heading in the right direction. At $2.629 billion, the total value of all buildings approved in the three months to August (seasonally adjusted) is up 14.6% on the equivalent value in the three months prior to that – a clear sign that new work is now coming in faster than it was earlier this year.
The bulk of the improvement lies in the non-residential sector. Residential building conditions remain subdued. Dwelling approvals improved in August, but only after poor numbers in June and July. At $1.486 billion, the seasonally adjusted value of dwelling approvals in the three months to August was down 1.7% on the corresponding figure for the three months to May ($1.511 billion) and well down on the $1.640 billion recorded in the three months before that. Not surprisingly then, the Housing Industry Association (HIA) expects the seasonally adjusted number of construction starts in the current quarter to come in at a modest 4,460 – virtually unchanged from last quarter but well down on the quarter before that (5,110) and a long way of the 5,230 starts recorded in the December quarter last year.
Outside of building, an already strong mining construction sector has been given a further boost by Chevron’s approval last month of its $29 billion Wheatstone Gas project in the Pilbara region. Work on that facility – the second largest ever resources project in Australia, is expected to get going before the year’s end.
In terms of employment, Western Australia’s construction labour market has eased back from its peak early this year. In the three months to August, the total number of people employed in the industry throughout the state stood at 133,600 – down from 138,400 in the three months to May but still up more than 4% from the same level last year (128,100).
Key Moving Sectors
Along with mining, there are some signs of immediate activity in the transport, water and multi-residential sectors.
Following sign-off on Wheatstone and an anticipated upcoming start on the project, along with a recently announced $810 million of iron ore operations from Rio Tinto, an already strong mining and heavy industry construction sector is set to receive an even further boost.
- Chevron Wheatstone gas project (recently approved/upcoming)
- Barrambie Titanium Vandium & Iron Project (upcoming)
- Barrambie Vandium Processing Plant (upcoming)
- Tuntunup Heavy Mineral Sands Project – Stage 1 (upcoming)
- Rio Tinto Pilbara iron ore expansion (recently announced)
With a few projects in the immediate pipeline, there is some activity in the state’s transport sector.
- Perth City Link (expressions of interest sought)
- Rous Head Harbour Marina (upcoming)
The multi-residential sector will receive a boost once work gets going on the Riverside project in Perth. Two potential developers, Lend Lease and Multiplex, have been shortlisted for the development.
- Riverside (short list announced)
- Hawthorne Place Mixed Use Development (upcoming)
With the recent announcement from Rio Tinto of a $292.4 million sustainable water supply project for its operations in the Pilbara, there are some signs of activity in Western Australia’s water construction sector.
- Rio Tinto Pilbara sustainable water supply project (recently announced)
- Southern Seawater Desalination Plant Stage 2 Expansion Project (upcoming)