Australia’s Building Industry Outlook for 2013
2012 may have been a slow year for the Australian building industry, but 2013 is shaping
up to be a little more positive. Below, we discuss what’s on the building industry’s cards for
2013 and what this means for the pest market.
The Current State
According to the Housing Industry Association, Australia saw a 6% increase in new home
sales in December 2012. On top of that, there was also a 2.9% increase in building
approvals in January this year (as reported by ABS).
A recent survey conducted by MBA shows that builders expect conditions to improve over
the next 6 months and that both residential builders and developers are confident that
things will turn around.
Non-residential builders, on the other hand, are reporting a fall in construction work and a
decrease of projects in the pipeline.
Land Sales & Construction Costs
2012 also saw a significant increase in land sales and the trend appears to suggest that
this will continue, despite growing costs. HIA reported the median price of a block of land
increased by approximately 4% in the September quarter last year. Along with these rises
in land costs, builders and developers are also struggling to provide affordable house and
land packages for consumers. This means that constructions costs will also continue to
grow throughout 2013 and may unfortunately impact builders’ bottom lines and profitability.
Are Rate Cuts & Grants the Saviour?
Yet it is hoped that with lower interest rates and construction grants, consumer confidence
will grow and will help to revive the building industry as the year continues.
Interest rates consistently inform consumer opinions and decisions when it comes to
building new dwellings and economists are encouraging further interest rate cuts for 2013.
Yet many feel that although rate cuts can fuel buyer confidence, they won’t necessarily put
money in buyer’s pockets.
MBA’s Chief Economist, Peter Jones, commented that a cut in interest rates would not
provide sufficient stimulus to the industry. Instead, what is required is “a short term
increase in the first home owner’s grant for new houses and bringing forward of civil works,
combined with rate cuts will go a long way towards restoring confidence.”
Funding has also become an issue for many consumers and developers, with a lack of
available financing contributing to the slow growth of the building industry. These
conditions are reminiscent of the Global Financial Crisis, when the industry also saw
significant drops in credit and lending.
A shift in the state of the first home owner’s grant may well be the saving grace of the
building industry for 2013, with more incentives now available to first home buyer-builders
across the nation. According to the ABS late last year, building activity faced a 2% rise in
new home commencements, with
NSW builders benefitting from a 9% increase in the September quarter.
So What Does This Mean for Us Pesties?
The urban pest industry will continue to play a strong role in the building market in 2013,
particularly in the residential sector. Given the slow but steady pace of growth, however,
pest companies will still need to continue to implement cost-saving measures in order to
preserve their bottom lines, as well as look for ways to provide more efficient services to
Opportunities for new business can still be found in the residential building market, but it
may be many months before fast growth is witnessed.
What do YOU think the pest and building industries have in store for 2013? Contact
Agserv today and share your opinions with us!