Apartment Construction on the Increase

April 2010 has seen a significant expansion in the Australian Construction Sector – with the most significant increase in the construction of new apartments. Such expansion has not been seen for over 2 years.

The Australian Industry Group (HIA) Performance Construction Index rose 4.8 points in April to a seasonally adjusted 55.8 points.All the major sectors in the construction index rose due to more tenders and support for school building work following the federal government’s stimulus programs, the report said. The apartment building sub-index rose 10.3 points to 58.8 in April, only the second time in the past 27 months that the sector has recorded an increase in activity.
Peter Burn, The Australian Industry Group Director for public policy, believes the increase in building activity across all sectors indicated strength in the economic recovery.
“The house building sub-sector has now been in positive territory for nine consecutive months,” Dr Burn said. “It will need to continue to grow, together with strong demand and to catch up on the shortage of supply that has helped push up prices. This will be a challenge in the face of recent interest rate rises.”

A boost in activity and new orders lifted the employment index by 5.8 points to 56.8 in April, the strongest rate firms raised their staff levels since January 2006.
Dr Burn said the commercial and engineering construction sub-sectors improved for a second straight month, but both were below pre-2008 levels.

“In both these sectors, fiscal stimulus measures still feature strongly in total activity and will remain important to their health over the rest of the year,” he said.  According to Ben Phillips, HIA senior economist, as the construction industry has overall rebounded, there has been a strong increase in demand for in both apartments and detached housing.

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