Mixed bag for Australia's building industry

Mining investment and strong population growth are driving the construction of new buildings in Western Australia, with the state boasting the strongest residential building industry in the country, according to a report from the Housing Industry Association (HIA).

The inaugural Housing Scorecard report benchmarks the performance of 13 key indicators of activity in residential building against long-term averages in each state and territory.

Indicators include detached house building, apartment building, renovations, construction labour force, housing finance and turnover of established homes.

The HIA aggregated the analysis into a scoring system ranking the relative strength/weakness of residential building conditions in each area.

On the other end of the spectrum from WA, Tasmania’s building industry ranked the weakest. The ACT ranked second behind WA, and Victoria came in third.

“Conditions in the residential building industry diverge widely both across and within states and territories,” Harley Dale, HIA chief economist, said.

“Conditions in Western Australia’s residential building industry are currently the strongest in the country. Mining investment and strong population growth have seen WA’s economy growing quickly, but until recently residential building had been stuck in the slow lane. The stronger conditions more recently have taken WA to the number one position for the first time in over five years.”

Despite NSW’s lacklustre fifth ranking, Dale said it was a positive result for Australia’s most populated state. “A very encouraging finding is that the resurgence underway in New South Wales’ residential building industry is lifting the state up the table after spending the best part of the last decade in the wilderness,” he said.

“New home building has been the driver of this outcome, but weaker conditions in the renovations segment have held back the state’s charge up the table. [While] residential building conditions in NSW still rank only fifth nationally… there is clearly some positive momentum there.”

If recent levels of activity in NSW continue, the state will claim the top spot on the Scorecard, Dale added. On the other hand, he said a marked deterioration in Tasmania’s broader economy had impacted Tasmania’s residential building industry.

The HIA further warned that demand for housing across the country will increase, citing the release this week of population projections by the Australian Bureau of Statistics (ABS) predicting that Australia’s population will grow from just under 23 million to 46 million by 2075.

“Throughout the last decade, housing supply policy has not been given the priority deserving of issues that play such an important role in our economy and in the welfare of the community,” HIA economist Geordan Murray said.

“The ABS projections send a clear message to policy makers around the country. Ensuring that the supply of new housing can meet the needs of a growing population is an urgent and ever-present policy priority.”

Housing Scorecard: how the states compare

Rank    State

1             WA

2             ACT

3             VIC

4             NT

5             NSW

6             SA         

7             QLD

8             TAS

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