NT's building and construction industry a glass half full
On the back of a $1.4bn NT Government infrastructure package and the Territory’s share of a $5bn development fund across the deep north announced in the latest Federal Budget, building and construction businesses generally see the future as a glass half full.
Concern about recent major company collapses in successive months, other companies’ inability to get bank finance, lay-offs in commercial construction after several years of strong growth, together with angst about a looming “valley of death” as big projects near completion, all are worries nonetheless counter balanced by optimism.
Significantly a Deloitte pre-budget survey of 100 businesses across a range of NT industries revealed optimism in their ability to gain leverage from forthcoming major developments in the construction and resources sector.
This is optimism confirmed by Master Builders Association (MBA) executive Dave Malone who says that when current major projects in Darwin are finished “there will be others of sufficient size to provide adequate work for the Top End’s construction industry”.
Residential construction
After residential construction peaked two years ago, new construction stabilised, and the Housing Industry Association (HIA) expects activity to remain at elevated levels for the next couple of years.
Household confidence and expenditure together with current loose monetary policy will be helpful, especially in the light of Deloitte’s expectation of population growth of just under 3% annually into the 2017-18 financial year.
The 1,685 building approvals for new houses and apartments in the first 10 months of last year was the second highest for any corresponding period during the past five years.
The MBA’s Dave Malone believes Government changes to the first homebuyer grant, land release initiatives, and continued low interest rates will help support future residential construction.
What’s more, according to the HIA, the annual dollar value of investment in home renovation is expected to increase from $214m in the last financial year to $277m in 2016-17.
Non-residential building
For the past three years, work associated with the huge Ichthys LNG Project (about 60% complete), the Darwin’ Correctional Precinct (recently opened), and concurrent with a rising demand for housing, has seen the dollar value of NT building and engineering construction more than double to $4.9bn annually during that time.
The Australian Construction Industry Forum (ACIF) now expects activity to drop back by 2017-18 to “a normal historical level of about $3.2bn”, while in the same period Deloitte forecasts private construction investment will suffer an annual two-thirds decline towards a normal $700m approximately.
It’s pain that the company’s survey suggests is being shrugged off by optimism that stems from population growth and belief in underlying strength in the broader NT economy. A limited pipeline of projects is progressing, notably in the health care sector linked to the Palmerstone Regional Hospital and work on military housing and associated facilities are expected to keep activity at historically respectable levels.
Correspondingly the ACIF expects employee numbers in the NT’s construction sector will ease back in the next three years towards the normality of between 12,000 and 13,000.
For more information, contact Macks Advisory on 08 8231 3323 or visit our office at Level 11, 99 Gawler Place, Adelaide SA 5000.
