Queensland building industry set for bumper year on record approvals

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Jan 30, 2017

Queensland building industry set for bumper year on record approvals

The Master Builders Queensland's latest 'Building industry outlook 2017' report shows the industry is set for a bumper 2017, on the back of record high building approvals and a strong pipeline of work.

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The Master Builders Queensland latest 'Building industry outlook 2017' report shows the Queensland industry is set for a strong year as it makes its way through the strong pipeline of work.

However, as a significant amount of new dwelling supply flows onto the market, especially for inner city units, there is likely to be some future easing.

The decline in building approvals and finance commitments indicates that demand is already cooling. Over the past 12 months, approvals for new dwellings have fallen 4.8 per cent. Total construction finance has also eased from its peak.

However, there is still a strong pipeline of work as building approvals remain at historic highs.

Paul Bidwell, Master Builders Queensland deputy CEO, says the residential construction sector will start the year on a strong note as it makes its way through the existing pipeline of work.

But he warned that “beyond the existing pipeline of work demand is softening. There are reports of softer rents, more modest price growth.”

“Master Builders forecasts 43,000 dwelling commencements in 2017 which will be a small moderation on the record level of 48,000 achieved in 2016. In 2018 we estimate dwelling unit commencements will further moderate but still be above 40,000 starts,” said Bidwell.

Bidwell said the types of developments coming on stream will change away from large unit blocks.

“The growth will continue to be concentrated in the south-east but will shift away from large unit blocks to smaller developments – detached housing, townhouses and boutique unit developments," he said.

Bidwell also said he expects to see a rise in the owner-occupier market for new dwellings.

"Owner occupiers will increasingly move into the market," he said, "while investors will become more cautious.”

The report predicts renovation activity will remain solid. The high cost of buying a new home - with not only the high costs of property but the additional costs of stamp duty, agent commission and legal fees - will encourage many owners to renovate rather than sell.