As Australia’s construction industry continues to see significant changes, it is being reported that construction rates in May fell at their most dramatic rates in six years.
The Australian Industry Group and Housing Industry Association has reported that their Performance of Construction Index (Australia PCI®) descended 2.2 points to 40.4 in May—thus marking the deepest monthly deterioration in building conditions over a six-year period.
This represented the sharpest monthly deterioration in building conditions for six years and sees the index languished below the 50.0 levels, indicating a deterioration in conditions.
Percentages in home building fell 34.4, apartment building 37.7, commercial building 44.3, activity 39.7, employment 39.5 and selling prices 36.2—although other studies indicate that this last figure is actually rising. This report also indicated that engineering rates are up 50.3, while input prices rose 69.3 and wages boosted 60.2. A recent Arcadis report indicates that 2018 tender prices actually elevated by 4.0 percent, 3.6 percent, 1.5 percent and 1.2 percent in Sydney, Melbourne, Brisbane and Perth.
This combination of drooping selling prices and elevating input prices indicates ongoing profit margin problems, along with elevated energy costs, higher priced commodities and imported construction material prices, and an ever-growing problem of finding enough skilled workers to fill available construction jobs.
Furthermore, the reduction in construction is likely to continue in future months, although planned infrastructure projects are filling up the docket. The onset of lowering interest rates also should help.
All things considered, though, there exists much uncertainty and unrest in today’s housing market.