The building industry is disappointed following the release of ABS statistics confirming residential construction faltered in the early part of 2013, with Master Builders Australia (MIA) CEO, Wilhelm Harnisch, adding that trading conditions in the building industry remain ‘worryingly in the doldrums’.
The overall value of construction work done fell by 2%, seasonally adjusted, in the March quarter and residential building alone decreased 1%.
The most worrying aspect of the statistics, according to Harnisch, is the drop in new housing activity.
"Regrettably, uncertainty and caution is widespread throughout the industry and the broader economy. Feedback from builders and contractors is that new home buyers and clients are putting their decisions on hold until after the election in September.”
Housing Industry Association (HIA) chief economist, Shane Garrett, is slightly more optimistic.
"The slight fall in building activity in the first quarter of 2013 is at odds with the generally improving conditions over previous quarters. In spite of today's disappointing figures, we continue to believe that housing activity is in recovery mode. The fact that residential activity has faltered shows that there is no room for complacency. However, this is a delicate recovery and policy settings need to be as supportive as possible to ensure that it is sustained," he says.
"The general recovery in new home building activity shows that the succession of RBA rate cuts is having positive effects and that further reductions will help safeguard the revival. On the other hand, the dismal performance of renovations places the banks very firmly in the dock. Evidence on the ground tells us that lenders are not forthcoming when it comes to home equity release financing. This is really hurting renovations activity," adds Garrett.
Harnisch says he also believes the March quarter ‘construction work done’ figures justify the RBA’s decision to cut interest rates to record lows in May.
"The building industry remains hopeful that the impact of Reserve Bank interest rate cuts will help the fledgling housing recovery over the next few months…The Reserve Bank continues to do the heavy lifting trying to stimulate confidence in the economy. Government policies must also be in place to complement interest rate cuts, otherwise the size and strength of the industry's recovery is at risk," says Harnisch.