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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 49, September quarter 2016

 Issue 49, September 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 September 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 17.2% to $44.0 billion. This was due to an $11.6 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 $44.9 billion in 2016-17. This anticipated increase is due to falls in engineering construction expenditures being offset by continued growth in residential construction. Residential dwelling construction is projected to grow at 7.2% or $1.4 billion, offsetting the projected fall across engineering construction of $0.5 billion.

In 2017-18 total Queensland construction activity is forecast to increase by 2.2% with growth 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 14.2% to $18.7 billion in 2015-16, total dwelling construction is projected to increase by 7.2% to $20.1 billion in 2016-17 and 3.3% to $20.7 billion in 2017-18. Growth in new private dwelling construction of 6.8% in 2016-17 and 2.2% in 2017-18 is projected. Renovation expenditure is forecast to increase by 7.5% in 2016-17 and 6.2% in 2017-18. Total non-residential building activity is forecast to increase by 2.5% to $6.7 billion in 2015-16 with activity forecast to increase slowly by 1.0% over 2016-17 and a further 1.1% over 2017-18 reaching $6.8 billion. Total Queensland engineering construction activity decreased by 38.5% to $18.6 billion in 2015-16. Although a further decline of 2.7% to $18.1 billion is forecast for 2016-17, a 1.4% increase in activity to $18.4 billion is forecast for 2017-18. 

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Department of Housing and Public Works - Contractor Survey

The majority of contractors surveyed (91%) did not report overall difficulties in employing subcontractors in the September quarter 2016 (79% in June quarter 2016). In the same period 29% of contractors (34% in June 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 (no change from June quarter). Among those respondents who experienced subcontractor shortages, ‘increased project costs due to an increase in subcontractor rates’ (46% of contractors down from 61% in June quarter) and ‘project delays’ (42% of contractors down from 68%) were the most reported impacts mentioned by respondents.

On average, contractors estimated they were operating at 65% of total capacity in the September quarter (up from 62% in June quarter).

Looking at their workload over the last three months, 38% of respondents reported their workload had stayed the same, 35% indicated it had increased and 28% thought it had decreased. Looking ahead to the December quarter, 54% of contractors expected their workload to increase (up from 43%), 33% expected it to stay the same (no change) and 13% expected it to decrease (down from 24% in the June 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 10% expecting them to decrease in the December quarter.

In terms of building material costs, 53% anticipated they would stay the same in the December quarter and 38% expected they would increase in the same period.

On average, contractors estimated that 37% 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 September quarter 2016, consultants estimated they were operating at 70% of their full capacity (up from 67% in the June quarter 2016). Half of all consultants (50%) reported their workload had stayed the same over the past three months (up from 33%), 40% indicated it had stayed the same (up from 35%) and 10% reported it had decreased (down from 32%).

Looking ahead to the December quarter, 47% of consultants anticipated their workload would increase (up from 33%), 38% of consultants expected it to stay the same (down from 42% in the June quarter and 12% of consultants predicted their workload to slightly decrease in the next three months (10% in the previous quarter). No consultants expected a considerable decrease.

The majority of consultants surveyed (70%), stated they would maintain their current staff numbers over the next three months, 28% of respondents indicated their firm was looking to increase staff numbers, while no consultants expected a decrease in staff numbers.

The survey found 58% of consultants were not currently experiencing difficulties finding work (up from 50%), 23% of consultants were experiencing difficulties in finding work (down from 40%) and 18% believed they were somewhat experiencing difficulties (up from 10%).

Of the consultants surveyed, 73% believed fees would stay the same over the next three months (up from 67% in the June quarter), while 12% expected them to decrease (down from 15% in June quarter) and 12% anticipated an increase (up from 15%).

On average, 51% of consultants’ projects involved the use of online programs with the survey also finding 45% of consultants were satisfied and a further 10% were very satisfied with web collaboration systems.

Consultants estimated that 33% of their workload over the previous three months was for the government (56% for the state government, 34% 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 5.3 tenderers in the September quarter 2016, increasing from 4.5 tenderers per project in the June quarter 2016. Looking at open tenders accepted in the September quarter 2016 (by value) compared to the June quarter 2016, the breakdown by project type was 37% for authorities (up from 11%), 24% for education-schools (down from 40%), 24% for residential (down from 34%), 7% for education-colleges (down from 8%), 5% for hospitals/health/welfare (down from 6%), 3% for administrative/offices (up from 1%). There was nil activity for industrial/transport, civic, authorities and recreational (all previously nil).

The Far North and Wide Bay Burnett regions accounted for the largest proportions of all open tenders (by value) in the September quarter 2016 with respective shares of 34% (up from 2%) and 32% (also up from 2%). This was followed by the Moreton South/Gold Coast (17% up from 6%), Brisbane (8% down from 48%), Mackay (7% down from 10%), and North West (2% up from nil). No activity was recorded in the Northern (down from 10%), Darling Downs (down from 7%), Moreton North/Sunshine Coast (down from 7%), Fitzroy (down from 7%) and Central West (down from 1%).

Tender activity in the September quarter 2016 was slightly higher than the average for education-school projects and within the Brisbane and Far North regions.

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Building materials cost comparison

In the September quarter 2016, the only material monitored by the Department of Housing and Public Works that recorded a significant increase from the previous quarter was float glass tinted – 4mm thick (7.5%). No materials recorded a decrease from the previous quarter. According to the Cordell Building Cost Guide, between September quarter 2015 and September quarter 2016 no materials monitored recorded a cost decrease. The most significant cost increases were in float glass tinted – 4mm thick (7.5%), 25 mpa concrete (4.9%) and face brick – settler range (3.7%).

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Industry News

Building Construction and Maintenance Category

The Building Construction and Maintenance (BCM) Category has been formed under the new Queensland Government procurement operating model and is being led by the Department of Housing and Public Works on behalf of Government. This team’s core goal is to work with industry and across government departments to ensure spending on building construction and maintenance programs happens in a planned and collaborative way.  By focusing on increased opportunities for local business and enabling social outcomes the team aims to create greater value for Queenslanders.  An Industry Advisory Group for the BCM Category is also being formed to ensure that views of industry are well represented.

Queensland Home Warranty Scheme

The latest Building and Plumbing Newsflash 'Queensland Home Warranty Scheme reforms - effective 28 October 2016' is now available online.

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Last updated 03 November 2016   Creative Commons Attribution 4.0 International (CC BY 4.0)

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