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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 52, September Quarter 2017

Issue 52, September Quarter 2017

Welcome to the Building Industry Bulletin

The Queensland 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 Department of Housing and Public Works (HPW) engages economic research consulting firm, the National Institute of Economic and Industry Research (NIEIR) to provide independent, updated data and analysis on the profile of the Queensland building and construction industry using regional economic modelling and forecasting techniques.  

The September quarter 2017 economic update from NIEIR shows that in 2016-17 Queensland construction activity (or total work done across the residential building (houses and units), non-residential building and engineering construction sectors) was $44.7 billion.  

In 2017-18 total Queensland construction activity is forecast to increase to $48.7 billion. This represents a forecast increase of 9% from 2016-17, due to increases of almost $3.5 billion in engineering construction, $592 million in residential building and a decrease of $7.6 million in non-residential building.  

In 2018-19 total Queensland construction activity is forecast to increase by a further 7.4% to $52.2 billion with growth anticipated in the engineering construction and non-residential building sectors and a forecast decline for the residential building sector.  

Despite continued low interest rates, the level of growth in private dwelling expenditure remains slow.  After decreasing by 0.3% to $19.5 billion in 2016-17, total residential building is projected to increase by further 3.0% to $20.1 billion in 2017-18. Current building approvals indicate this will be followed by a decline of 3.1% to $19.4 billion in 2018-19. New private residential dwelling construction increased by 1.3% in 2016-17 with decreases of 2.4% in 2017-18 and 0.7% in 2018-19 projected. Renovation expenditure decreased by 4.0% in 2016-17 with an increase of 15.9% (resulting from expenditure on repairs to damage from Cyclone Debbie) in 2017-18 to be followed by projected decline of 7.8% in 2018-19.  

Total non-residential building activity (e.g. offices, shops and hotels) declined by 5.0% to $6.7 billion in 2016-17 with a marginal further decline of 1.1% forecast for 2017-18 due to low levels of approvals for non-residential building over 2014-15. By 2018-19 stronger growth in private sector non-residential building activity is forecast, with total growth in the sector of 11.2% to $7.3 billion, as new projects move to the construction phase.  

In 2015-16 total Queensland engineering construction activity (e.g. roads, bridges, water, sewerage and mines) declined by 39.4%, largely driven by a 43% decline in private engineering construction expenditure, particularly heavy industry (e.g. highways, bridges and tunnels).   After an increase of 0.9% to $18.6 billion in 2016-17, further increases of 18.7% to $22 billion in 2017-18 and 15.8% to $25.5 billion in 2018-19 are forecast, due to the recommencement of heavy industry projects that were stalled or cancelled at the completion of the last LNG construction phase.  

An estimated 220,000 people were employed in Queensland building and construction (residential dwelling, non-residential building and engineering sectors including contractors, trade contractors and consultants) in 2016-2017. 

Building Industry and Policy Contractor and Consultant tracking survey  

To help understand the state of the building and construction industry cycle in Queensland, DHPW conducts quarterly research surveys with contractors and consultants registered with the department’s prequalification (PQC) System. In the September quarter 2017, Kantar Public surveyed respondents across conditions including employment supply, workloads and labour costs.  

Contractors 

Contractors indicated on average they were operating at 67% of capacity in the September quarter representing a decrease of 4% from June quarter 2017. Historically capacity during the March to June period appears to be higher due to the end of year financial push for projects. Although the reported workload for contractors had slightly decreased (23% compared to 11% in June quarter) 39% of contractors still reported their workload had increased in the September quarter. There was confidence in the forward view of work and planning with 51% of contractors believing their workload would increase over the next three months compared to 42% in June quarter.    

Most contractors (58%) felt labour costs would remain the same over the next three months, however 33% believed they may still increase. There were mixed thoughts on whether building material costs would go up or down with 44% believing they would go up and 46% believing they would go down (compared to 60% and 33% in June quarter respectively). 

Representing the highest percentage over the last eighteen months, 26% of contractors reported difficulty employing subcontractors overall.  In the same period and following a continued trend since September 2016, 44% of contractors reported having difficulty finding suitably experienced or qualified subcontractors. Almost half of all contractors (49%) suggested the difficulty employing subcontractors was amongst a small number of specific trades.  

The most mentioned trades for those experiencing difficulty employing subcontractors were carpentry (47%), plastering (24%) and electrical (21%). Among those respondents who had experienced subcontractor shortages, ‘project delays’ (53% of contractors down from 63% in the June quarter) was the most reported impact mentioned by respondents.  

On average, contractors estimated that 36% of their workload over the previous three months was on behalf of government (local, state or federal). 

Consultants  

Consultants indicated on average they were operating at 74% of capacity in the September quarter 2017, maintaining the upward trend since June quarter 2016 (67%). While 41% of consultants felt their workload had increased over the previous three months (compared to 38% in June 2017) the same proportion (41%) reported they had not seen a change in workload. Projected future workloads for consultants were more positive with 84% of consultants indicating their workload would either increase or remain consistent in the next three months compared to 73% in the June quarter 2017.  

Significantly more consultants reported they were not experiencing any difficulty finding work (70%) compared to the June quarter (58%).   

While 68% of consultants reported that they would maintain their current staff numbers over the next quarter, 30% indicated they were looking to increase staff numbers. Remaining largely unchanged since September quarter 2015, 25% of consultants believed they would have difficulty employing staff over the next three months.  

Of the consultants surveyed, 82% believed fees would stay the same over the next three months (up from 72% in the June quarter), 9% expected them to increase (up from 14%) and 8% anticipated a decrease (down from 11%).  

Read the Contractor and Consultant tracking survey report (PDF, 869KB)

PQC tender activity 

Tender activity for Queensland Government building projects over $1 million averaged 3.9 tenderers per project in the June quarter 2017, decreasing from 4.5 in March quarter 2017. Looking at open tenders accepted in the September quarter 2017 (by value) compared to the June quarter 2017, the breakdown by project type was 41% for education-schools (up from 34%), 26% for residential (down from 41%), 22% for authorities (e.g. police stations, court buildings, up from 13%), 8% for hospitals/health/welfare (up from 6%) and 3% for administrative/offices (down from 6%). There was nil activity in the recreation, education-colleges, civic and industrial/transport sectors (all previously nil).  

The Far North and Brisbane regions accounted for the largest proportions of all open tenders (by value) in the September quarter 2017 with 39% (up from 13%) and 24% (down from 54%) of shares respectively. This was followed by the Fitzroy (10% down from 6%), Northern (8% up from nil), Darling Downs (7% up from 5%), North West (5% up from nil), Moreton South/Gold Coast (3% down from 8%), South West (3% up from nil) and Mackay (1% down from 4%). No activity was recorded in the Moreton North/Sunshine Coast and Wide Bay Burnett regions (both down from 5%).  

Tender activity in the September quarter 2017 was slightly higher than the average for administrative/offices and authorities and within the Brisbane and Far North regions. 

Building material cost comparison

In the September quarter 2017, the only material monitored by the Department of Housing and Public Works that recorded a notable increase from the previous quarter was 25mpa concrete (2%). Other materials recording a minor increase during the quarter were aluminum windows – fixed (.90%), F8 pine 90mm x 35mm (.81%) and clay face bricks (.63%). According to the Cordell Building Cost Guide, between September quarter 2016 and September quarter 2017 the most significant cost increases were in float glass tinted – 4mm thick (13.4%), 25 mpa concrete (3.8%), aluminum windows – fixed (2.8%) and reinforcing steel mesh (2.6%). During this period, no materials recorded a cost decrease.
 

View the building material cost comparison table (PDF, 254KB) 

Industry news 

Non-conforming building products

The Building and Construction Legislation (Non-conforming Building Products – Chain of Responsibility and Other Matters) Amendment Act (the Act) commenced on 1 November 2017.  The Act establishes a chain of responsibility for building products, placing duties on building supply chain participants (from building product designer, importer, manufacturer, supplier and installer) to ensure building products used in Queensland are safe and fit for their intended use.
 
The Non-conforming Building Products Code of Practice released in November 2017, is designed to give guidance to industry on how to comply with Queensland’s nation-leading laws on non-conforming building products. 

Changes to the Prequalification (PQC) System   

On 1 September 2017, the Queensland Government implemented changes to the PQC System by raising the project dollar value thresholds (relating to the use of prequalified contractors and consultants on government building projects). The revised thresholds are as follows:  

  • the threshold for contractors has increased from $500,000 to $1M
  • the threshold for consultants has increased from $30,000 to $60,000. 

The PQC System is administered by the Building Industry and Policy division within the Department of Housing and Public Works. If you would like further information on these changes or the PQC System in general, you can contact the PQC team via PQCRegistrar@hpw.qld.gov.au or phone 1800 072 621.

Building Industry Fairness (Security of Payment) Act 2017

The Building Industry Fairness (Security of Payment) Act 2017  (BIF Act) received Royal Ascent on 10 November 2017.

The BIF Act:

  • introduces Project Bank Accounts (PBAs) in the building and construction industry;
  • improves progress payment processes;
  • changes the Adjudication Registry within the Queensland Building and Construction Commission (QBCC);
  • updates provisions relating to subcontractors’ charges;
  • enhances the powers of the QBCC to provide stronger regulatory oversight to the industry;
  • combines all security of payment provisions into one Act.
  


Last updated 27 November 2017    Creative Commons Attribution 4.0 International (CC BY 4.0)


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