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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 43, March quarter 2015

Issue 43, March quarter 2015

Welcome to the Building Industry Bulletin

The quarterly Building Industry Bulletin provides updates on the latest trends within the Queensland building industry as relevant to the activities of the Department of Housing and Public Works.

In this issue

Queensland Regional construction activity

The March quarter 2015 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2013-14 Queensland construction activity (or total work done across the dwelling, non-residential building and engineering sectors) grew by an estimated 4.7% to $64.0 billion. The main driver for construction growth over 2013-14 was engineering construction with a $2.0 billion increase in expenditure that represented 67% of total construction growth.

Due to a significant decline in engineering construction during 2014-15, in particular the mining industry as the LNG project construction phase ends, total construction activity is expected to decrease by 13.3% to $55.5 billion, with a further fall of 2.5% to $54.1 billion in 2015-16. In 2014-15 dwelling construction is forecast to increase total construction by $1.0 billion with engineering construction reducing total construction by $9.0 billion. For 2015-16 forecasts indicate dwelling construction should contribute over $1.1 billion to total construction growth whilst non-residential construction is expected to have a negative contribution of $36 million and engineering construction a negative contribution of $2.5 billion, resulting in a decline of $1.4 billion for the total sector.

After increasing by 4.7% to $14.5 billion in 2013-14, total Queensland dwelling construction is projected to further increase by 6.9% to $15.5 billion in 2014-15 and 7.3% to $16.6 billion. The outlook is positive due to continued low interest rates. Strong growth in new private dwelling construction of 11.4% in 2014-15 and 9.2% in 2015-16 is projected. Renovation expenditure is forecast to decline by 0.5% in 2014-15 and increase by 3.5% in 2015-16. Queensland’s non-residential building activity increased by 4.3% to $7.1 billion in 2013-14. A fall in confidence due to external factors such as declining coal prices combined with the winding down of the construction phase of the LNG projects is expected to have a negative impact on non-residential construction during the next few years. Total non-residential construction is forecast to decrease by 4.8% in 2014-15 and 0.5% in 2015-16.

Total Queensland engineering construction activity increased by 4.8% to $42.4 billion in 2013-14. With significant declines in private sector engineering anticipated over 2014-15 (21.1%) and 2015-16 (9.5%) particularly in the mining industry as the LNG project construction phase ends, total engineering activity is forecast to decrease by 21.6% and 7.5% respectively.

With the continued over-supply of construction labour supply projected over the next two years total construction prices are expected to remain flat. Declines, are however, expected in the non-residential building and engineering sectors.

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Department of Housing and Public Works - Contractor Survey

The majority of contractors surveyed (83%) had not reported overall difficulties in employing subcontractors in the March quarter 2015 (91% in December quarter).  In the same period 31% of contractors (up from 15% in December quarter) had difficulty finding suitably experienced or qualified subcontractors.

The most mentioned trades for those who experienced difficulty employing subcontractors were carpentry, concreting and electrical. Among those respondents who experienced subcontractor shortages, ‘increased project costs due to an increase in subcontractor rates’ (58% of contractors) and ‘project delays’ (50% of contractors) were the most reported impacts mentioned by respondents.

On average, contractors estimated they were operating at 62% of total capacity in the March quarter (down from 64% in December quarter).

Just over forty percent (41%) of respondents reported their workload had increased in the past three months, 34% indicated it had decreased and 25% thought it had stayed the same. Looking ahead to the June quarter, 58% of contractors surveyed expected an increase in their workload. Over a quarter (26%) of contractors expected their workload to stay the same and 14% expected it to stay the same.

The majority of contractors surveyed (61%) expected labour costs to stay the same over the next three months. An increase in labour costs was expected by 29% of respondents and the remaining 10% expected them to decrease in the next three months.

Almost half the respondents (55% of contractors) expected building materials to increase in the June quarter, 39% expected they would stay the same and no respondents expected them to decrease in the same period. On average, contractors estimated that 33% of their workload over the past three months was on behalf of government (local, state or federal).

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Department of Housing and Public Works - Consultant Survey

In the March quarter 2015 consultants estimated they were operating at 67% of their full capacity (down from 71% in December quarter). An increase in workload over the past three months was reported by 48% of the respondents (down from 52%), while 33% thought their workload had stayed the same (up from 28%). The remaining 18% thought it had decreased (down from 20%).

Looking ahead to the June quarter, 48% of consultants expected their workload to increase (up from 42%). Forty five percent (45%) of consultants expected their workload to stay the same (up from 40%) and the remaining 7% anticipated a decrease in their workload (down from 18% in the December quarter).

The majority of consultants surveyed (62%), stated they would maintain their current staff numbers (down from 72% in December quarter) 35% of respondents indicated their firm was looking to increase staff numbers (up from 27%) and 3% indicated a decrease in staff numbers (up from 2%).

The survey found over half (55%) of consultants surveyed were not currently experiencing difficulties in finding work (up from 53%) with a quarter (25%) experiencing difficulties and 20% reporting they were experiencing some difficulties.

Of the consultants surveyed, 68% believed consultant fees would stay the same over the next three months (down from 78% in December quarter), while 22% expected them to increase (up from 8%) and 8% anticipated a decrease (down from 12%).

On average, 42% of consultants’ projects involved the use of online programs with the survey also finding 33% of consultants were satisfied with web collaboration systems.

Consultants estimated that 25% of their workload over the previous three months was for the government (40% for local government, 53% for state government and 7% for federal government).

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PQC tender activity

Tender activity for Queensland Government building projects over $500,000 averaged 3.6 tenderers per project in March quarter 2015, decreasing from 4.8 per project in the previous quarter. Tender activity has not averaged under 4.0 tenderers per project since December 2006 when 3.8 tenderers per project was reported.

Looking at open tenders accepted in the March quarter 2015 (by value) compared to December quarter 2014, the breakdown by project type was 39% for authorities (up from 15%), 36% for education – colleges (up from nil), 11% for residential (down from 44%), 10% for administrative/offices (up from 5%), 3% for education – schools (down from 7%), 1% for recreational (up from nil) and nil for hospitals/health/welfare (down from 29%).

The Wide Bay Burnett region accounted for the largest proportion of all open tenders (by value) in the March quarter with a share of 27% (up from nil). This was followed by the Brisbane (25% up from 5%), North West (13% up from nil) and Moreton North/Sunshine Coast (10% up from 7%) regions. Further tender activity was recorded in the Fitzroy (9% down from 26%), South West (7% down from 10%), Far North (5% up from 2%) and Central West (4% up from nil) regions. The regions that recorded no tender activity in the March quarter compared to the previous quarter were Northern (24%), Moreton South/Gold Coast (21%), and Darling Downs (5%).

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Building materials cost comparison

In the March quarter 2015, the materials monitored by the Department of Housing and Public Works that recorded increases in cost were face brick – settler range (1.1%), 25mpa concrete (0.9%) and aluminium windows – fixed (0.7%). The only material to record a decrease in cost was F8 pine 90mm x 35mm (2.2%).

According to the Cordell Building Cost Guide the most significant cost increases between March quarter 2014 and March quarter 2015 were in reinforcing steel mesh (17.5%), aluminium windows – fixed (8.1%) and float glass tinted – 4mm thick (7.4%).

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Last updated 08 May 2015    Creative Commons Attribution 4.0 International (CC BY 4.0)

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