MBA says construction still strong

Master Builders Australia (MBA) is confident that 2017 is off to a good start in terms of business confidence. MBA National Manager – Housing Matthew Pollock said improved conditions in the December 2016 quarter combined with positive sentiment across both residential and commercial sectors have created sales and profitability increases and the highest employment intentions since 2014.

“Master Builders National Survey of Building and Construction shows that the positive outlook at the national level reflects the strong pipeline of work in the housing sector, reflecting the record building approvals and housing loans approved in 2016 and over 70% of survey respondents indicating their books are full for at least the next six months.

“Business confidence is also at its highest level in over two years and reflects a growing sense of optimism in the non-residential construction sector, particularly since the return of the ABCC. But commercial builders are looking for business-friendly policies from government such as a company tax cut and a credible structural Budget repair strategy to boost prospects in the sector.

“Residential builders are also looking to the government for leadership in promoting a collaborative approach from all levels of government to take concrete action to remove the structural impediments that stand in the way of building more new homes to ensure home ownership is within reach of all Australians.

“The results stand in contrast to some of the gloomier outlooks currently circulating for the industry, particularly housing. While some commentators are saying the housing market is about to hit a wall, sentiment from Master Builders members shows that activity in the home building sector will be strong at least for the first six months. There are more new dwellings being built right now than ever before.

“2017 should usher in the peak of the current housing cycle, with activity projected to peak at $66.7 billion. The wind-down in activity, set to commence in the latter half of 2017, is likely to be a slow decline rather than a sharp fall because of low interest rates and relatively strong demand remaining.

“Meanwhile, sentiment in the non-residential sector has come full circle in 2016. After reaching a low point of 46.3 in the June quarter 2016, the December quarter 2016 marks a return to positive sentiments (reaching 52.7 index points). 

“Business confidence is the highest in over two years, recording an index of 57.6, due to a turnaround in future expectations in the non-residential construction sector, where we are likely to see more positive growth prospects in some markets in 2017.

“The positive outlook sentiment expressed in the December 2016 Survey must be supported by pro-business policies in the May Budget, Pollock said.