Apartment construction sees fastest pace of growth
With land becoming much scarcer within our cities, particularly in Sydney which is constrained by the harbour and mountains, we are seeing many more new developments and residential housing taking to the skies.
Brand new apartment developments are becoming much more commonplace within our Australian capital cities, as well as within major cities around the world to cater for the growing population that are migrating to our cities, as well as catering for our changing lifestyle needs and wants and our constant need for convenience.
According to the latest construction performance index released by the Housing Industry Association (HIA) in conjunction with the Ai Group, the three month lead up to October 2015 has seen the fastest pace of growth in apartment construction in the last ten years.
However, in spite of this, during October, house building activity weakened and actually fell into the negative for the first time in five months, according to the Ai Group/HIA Australian Performance of Construction Index.
HIA economist Harley Dale stated that the October data reinforces the crucial role played by the residential construction in driving broader economic activity.
"The strong findings for apartments are consistent with the considerable pipeline of activity, while the overall trajectory for detached houses signals healthy construction in 2015/16, albeit off the cyclical peak of last year," he said.
“That is, however, a sharp monthly decline in the house building sub-index and some reversal will hopefully come through in November. There are signs emerging of a broadening strength to the construction industry – the results for the commercial and engineering construction sectors are encouraging.”
According to the HIA report, the level of approvals in 2015 is still likely to be higher than in 2014, whilst in 2015 so far, approvals for high density dwellings (flats or units in four or more storey buildings) have been the key driver of total growth.
In comparison, detached house approvals have remained steady for the last two years, with approximately 9,500 approvals per month, whilst approvals for semi-detached, row or terrace houses and townhouses have performed relatively strongly this year, with Victoria a key market for this housing type.
The report also shows that across the construction industry there has been strong growth in both new orders and employment. The new orders sub-index increased by 1.1 points to 53.5 points in October which indicated a stronger rate of expansion during this month and suggests a positive outlook for overall industry activity in the upcoming months.
Growth in new orders was not only seen across apartments, but also within engineering and commercial construction sectors, with the reading on new orders in the apartment sector only slightly below the nine-year high level recorded in September.
According to the Australian Performance of Construction Index, the index for houses this month was 47.0, whilst the index for apartments was 72.4, up by 9.2 from last month.
Published on 11th of November 2015 by Marty Stanowich