1 June 2012 – Australia residential and non-residential building sectors are still to make a recovery and the nation’s heavy reliance on the resource sector leaves the economy over-exposed to a downturn in the short-term with China’s recent announcement that it is aiming for a 7.5 per cent growth for 2012.
However in its Oceania Report for the Second Quarter 2012, Rider Levett Bucknall says that long-term, Australia will benefit from a more steadily growing Chinese economy as a strategic export destination.
The report also says that while “vast revenues continue to flow from resource intensive regions, particularly central Queensland and Western Australia”, the outlook for states more reliant on other sectors is less positive.
“Nationally, the retail sector continues to struggle, amidst lower consumer sentiment and online competition,” the report says.
“Manufacturing and other industries such as IT continue to move offshore in search of lower labour costs.
“Business confidence is down as financial services and other sectors lay off employees and consumer confidence remains uneasy, with many households choosing to pay down debt rather than spending.”
The report says while demand for labour and materials from the mining sector is driving activity and price escalation in some areas, in others construction activity remains down with both residential and non-residential building still to make a recovery.
“The economic headwinds facing Australia will determine how the construction industry fares in the next 12-18 months,” the report says.
“If/when sentiment in all sectors of the economy begins to improve, developers and financial institutions’ appetite for risk should rise and underlying demand in both residential and non-residential construction may drive a sustained recovery.”
Rider Levett Bucknall is an independent property market and construction cost consultancy with offices located globally. Oceania Report is published twice yearly and provides detailed local construction market intelligence and data.