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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 48, June quarter 2016

 Issue 48, June quarter 2016

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 update

The June quarter 2016 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2015-16 Queensland construction activity (or total work done across the dwelling, non-residential building and engineering sectors) fell by an estimated 16.5% to $44.4 billion. This was due to an $11.3 billion decrease in engineering construction, in particular mining with the LNG project construction phase now finished.

Total construction activity is forecast to increase by 2.1% to $45.3 billion in 2016-17. This increase is anticipated due to falls in engineering construction expenditures being offset by continued growth in residential construction. Dwelling construction is projected to grow at 7.5% or $1.4 billion. This growth will offset the projected fall across engineering and non-residential construction of $0.5 billion. 

In 2017-18 total Queensland construction activity is forecast to increase by just under 3% with growth anticipated in all three sectors.

The outlook for Queensland's dwelling construction is positive due to record low interest rates and steady population growth. After increasing by 15.2% to $18.9 billion in 2015-16, total dwelling construction is projected to increase by 7.5% to $20.3 billion in 2016-17 and 4.0% to $21.1 billion in 2017-18. Growth in new private dwelling construction of 7.1% in 2016-17 and 3.1% in 2017-18 is projected. Renovation expenditure is forecast to increase by 7.8% in 2016-17 and 6.1% in 2017-18. Total non-residential building activity is forecast to increase by 1.5% to $6.6 billion in 2015-16 with a similar level of growth expected for 2016-17. By 2017-18 stronger growth in non-residential building activity is forecast with growth of 3.5% as new projects move to the construction phase. Total Queensland engineering construction activity decreased by 37.5% to $18.9 billion in 2015-16. Although a further decline of 2.5% to $18.5 billion is forecast for 2016-17, a 1.4% increase in activity to $18.7 billion is forecast for 2017-18.

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Department of Housing and Public Works - Contractor survey

The majority of contractors surveyed (79%) did not report overall difficulties in employing subcontractors in the June quarter 2016 (78% in March quarter 2016). In the same period 34% of contractors (no change from March quarter) had difficulty finding suitably experienced or qualified subcontractors.

The most mentioned trades for those experiencing difficulty employing subcontractors were wall and floor tiling, plastering, and bricklaying. Among those respondents who experienced subcontractor shortages, ‘project delays’ (68% of contractors up from 36%) and ‘increased project costs due to an increase in subcontractor rates’ (61% of contractors no change from March) were the most reported impacts mentioned by respondents.

On average, contractors estimated they were operating at 62% of total capacity in the June quarter (up from 61% in March quarter).

Looking at their workload over the last three months, 40% of respondents reported their workload had stayed the same, 31% indicated it had decreased and 28% thought it had increased. Looking ahead to the September quarter, 43% of contractors expected their workload to increase (down from 48%), 33% expected it to stay the same (up from 26%) and 24% expected it to decrease (up from 20% in the March quarter 2016).

Almost two thirds of contractors surveyed (60%) expected labour costs to stay the same over the next three months. An increase in labour costs was expected by 28% of respondents, with 9% expecting them to decrease in the next three months.

In terms of building material costs, 55% of contractors expected an increase in the September quarter, 36% expected they would stay the same and 4% of 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).

Note: Percentages may not add due to rounding; Don’t know /Not sure percentages are not shown.

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Department of Housing and Public Works - Consultant survey

In the June quarter 2016, consultants estimated they were operating at 67% of their full capacity (down from 70% in the March quarter 2016). Just over a third (35%) of consultants reported their workload had increased over the past three months (up from 28%), 33% reported it had stayed the same (down from 45%) and 32% (up from 27%) indicated it had decreased (22% slightly decreased and 10% considerably decreased).

Looking ahead to the September quarter, 42% of consultants anticipated their workload would stay the same (down from 60% in the March quarter) and 33% of consultants expected it to increase (up from 28%). Ten percent of consultants expected their workload to slightly decrease (no change from previous quarter), with a further 10% expecting a considerable decrease in the next three months (up from 2%).

The majority of consultants surveyed (73%), stated they would maintain their current staff numbers over the next three months, 22% of respondents indicated their firm was looking to increase staff numbers, while 5% expected a decrease in staff numbers (no change in all figures from March quarter).

The survey found 50% of consultants were not currently experiencing difficulties finding work (up from 45%), 40% of consultants were experiencing difficulties in finding work (up from 30%) and 10% believed they were somewhat experiencing difficulties (down from 25%).

Of the consultants surveyed, 67% believed fees would stay the same over the next three months (down from 77% in the March quarter), while 15% expected them to decrease (down from 17% in March quarter) and 15% anticipated an increase (up from 5%).

On average, 40% of consultants’ projects involved the use of online programs with the survey also finding 43% of consultants were satisfied and a further 3% were very satisfied with web collaboration systems.

Consultants estimated that 26% of their workload over the previous three months was for the government (57% for the state government, 33% for local government and 10% for federal government).

Note: Percentages may not add due to rounding; Don’t know /Not sure percentages are not shown.

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PQC tender activity

Tender activity for Queensland Government building projects over $500,000 averaged 4.5 tenderers in the June quarter 2016, increasing from 3.5 tenderers per project in the March quarter 2016. Looking at open tenders accepted in the June quarter 2016 (by value) compared to the March quarter 2016, the breakdown by project type was 40% for education-schools (down from 50%), 34% for residential (down from 40%), 11% for authorities (up from 10%), 8% for education-colleges (up from nil), 6% for hospitals/health/welfare (up from nil) and 1.0% for administrative/offices (up from nil). There was nil activity for industrial/transport, civic, authorities and recreational (all previously nil).

Similarly to the previous two quarters, the Brisbane region accounted for the largest proportion of all open tenders (by value) in the June quarter 2016 with a share of 48% (up from 44% in March). This was followed by the Mackay (10% up from 2%), Northern (10% up from nil), Darling Downs (7% up from nil), Moreton North/Sunshine Coast (7% up from nil), Fitzroy (7% up from 4%), Moreton South/Gold Coast (6% down from 9%), Wide Bay Burnett (2% up from nil),  Far North (2% down from 41%) and Central West (1% up from nil).

Tender activity in the June quarter 2016 was slightly higher than the average for residential projects and within the Moreton North/Sunshine Coast and Brisbane regions.

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Building materials cost comparison

In the June quarter 2016, the only materials monitored by the Department of Housing and Public Works that recorded an increase from the previous quarter were 25mpa concrete (2.6%) and F8 pine 90mm x 35mm (1.4%). The only material to record a decrease was aluminium windows – fixed (0.7%). According to the Cordell Building Cost Guide, between June quarter 2015 and June quarter 2016 no materials monitored recorded a significant cost decrease. The most significant increases were in face brick—settler range (8.9%) and 25 mpa concrete (5.8%).

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Industry news

For Construction Skills Queensland's (CSQ) latest viewpoint : Why aren't there labour shortages in South East Queensland? please click here.  

Third party sites:

You should be aware that third party internet sites are not under the control of the Department of Housing and Public Works (DHPW). DHPW makes no representation concerning the content of these sites to you, nor can the fact that DHPW has referred you to these sites serve as an endorsement by our department of any of these sites.

These references are provided only as a convenience to you. This is to inform you that DHPW does not warrant, guarantee or make any representations regarding the correctness, accuracy, reliability, currency, suitability or any other aspect regarding characteristics or use of the information presented on these sites.

Where software is offered by a third party site, you are advised that DHPW may not have tested this software and therefore cannot make any representations regarding the quality, safety or suitability of any software found there. There are inherent dangers in the use of any software found on the internet, and you are cautioned to make sure that you completely understand the risk before retrieving any software on the internet. 

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Last updated 25 August 2016   Creative Commons Attribution 4.0 International (CC BY 4.0)

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