Residential house building fall to be “softer than anticipated”

“The survey results for the December quarter confirms that 2018 was another particularly good year for residential builders,” Matthew Pollock, Master Builders Australia’s national manager for economics said.

According to the index, the December quarter’s conditions were at 55.8, with future conditions predicted to measure at 58.6, the latter of which is the first time since July 2014 that the future conditions rose above the current conditions.

“Anything above a score of 50 suggests sentiments in the industry are positive and the index for business conditions has hovered above 50 for more than two years now,” said Mr Pollock.

This means, according to the report, that a predicted “wind down in residential activity may be short lived and relatively moderate”, which supports previous information release by the Housing Industry Association which said that leading indicators of future activity, recent building approvals data and the housing finance figures, point to demand for housing.

However, the data that Master Builders Australia used for their predictions was an improvement in urban markets and strong work conditions in Sydney and Melbourne.

“This is a national survey and therefore it does overshadow some regional differences. Conditions have generally been tighter in WA, NT and SA while prospects remain more positive in NSW, Victoria and the ACT,” Mr Pollock said.

“Despite an expectation for a moderation in residential activity, residential construction business are still generally upbeat about their pipeline of work, suggesting the upcoming fall in residential construction activity may be softer than anticipated.”

The report also warns that conditions may still decline due to predicted falls in residential building activity in Sydney and Melbourne over the next year.