Australia’s quantity surveyors expect workloads to continue rising over the next 9 months, according to the latest Westpac/AIQS BRIX Building Survey, but confidence is falling.
The level of confidence peaks in the December quarter 2006, with a net balance of 34% of respondents expecting workloads to increase.
However, confidence levels in the fourth quarter of the survey period – June 2007 – were at their lowest, with a net balance of 5% of respondents expecting workloads to fall.
The Outlook over the 12 month survey period has declined since the March 2006 survey.
“We believe the fall in optimism is at least partially due to the May interest rate rise, despite a healthy economy and very low unemployment levels,” Westpac’s director of property markets Frank Allen said.
“It also explains the declining demand for QS services before construction in the residential sector over the quarter, a reversal from the March survey where respondents reported that demand in the residential sector was improving,” Allen said.
“Given the fact that interest rates rose again in August and are expected to rise again in November, we think it’s unlikely we will see a significant improvement in the optimism levels of respondents. In the short term this is likely to be felt the most in NSW, particularly in the residential sector.”
The survey of Australia’s major quantity surveying companies is conducted quarterly for Westpac and the Australian Institute of Quantity Surveyors by Dr Anthony Mills at RMIT University, Melbourne and covers in excess of $18 billion worth of projects.
The survey examines each phase of the construction cycle: pre-construction, during construction and post-construction.
Western Australian respondents were again the most positive in each of the four quarters, however the level of confidence dropped to a net balance of 17% of respondents expecting workloads to increase in the fourth quarter of the survey period, after peaking at 67% in the second quarter – December quarter 2006.
“The booming Western Australian economy continues to drive a result where no respondents from Western Australia expected workloads to decrease at any stage during the survey period. The only other State where this occurred in the June survey was Queensland, which is also benefiting from the continuation of the resources boom,” Allen said.
Building costs are still rising, with QSs reporting a growth rate of 6.3% for the year to June 2006, against a forecast of 6% from the June 2005 survey. Respondents expect that building costs will rise by 6.0% in the year to June 2007.
“The rate of growth appears to have stabilised at a National level, with the year to December 2005 and year to March 2006 also having recorded growth of 6.3%.” AIQS general manager Terry Sanders added.
“However, this is the second survey in a row where the rate of forecast building cost growth has accelerated – albeit marginally.”
Expected building price cost growth over the 12 month forecast period is expected to be strongest in Western Australia at 10.7% and Victoria the weakest at 4.1%. New South Wales is expected to post growth of 4.2% over the next 12 months.
Some trades have experienced more stress than others. The Glazing trade had the highest cost growth in the June 2006 quarter at 4.3%. Suspended Ceilings saw the smallest cost rise at 1.2% over the quarter.
By Adam Parsons