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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 58, March Quarter 2019

Issue 58, March Quarter 2019

Welcome to the Building Industry Bulletin

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

​ 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 March quarter 2019 economic update from NIEIR shows that in 2017-18, Queensland construction activity [or total work done across the residential building (houses and units), non-residential building and engineering construction sectors] increased by 4.0% to $48.7 billion. 

In 2018-19, Queensland construction activity is forecast to decline by 5.0% to $46.3 billion. This is due to decreases of just under $1.1 billion in non-residential building, $690 million in engineering construction and $652 million in residential building. 

In 2019-20, Queensland construction activity is forecast to grow by 2.7% to $47.5 billion due to an increase of $2.2 billion in engineering construction. 

Queensland engineering construction activity (e.g. roads, water, sewerage and mines) increased by 10.5% to $21.2 billion in 2017-18. Following a small decline of 3.2% to $20.6 billion in 2018-19, engineering construction activity is forecast to increase by 10.7% to $22.8 billion in 2019-20, due to the commencement or continuation of major highway (e.g. Second Range Crossing, Toowoomba), rail (e.g. Cross River, central Brisbane) and mining projects (e.g. Byerwen Coal Project, Bowen Basin). 

Total non-residential building activity (e.g. offices, shops and hotels) increased by 8.1% to $7.9 billion in 2017-18. This is forecast to be followed by a decline of 14.1% to $6.8 billion in 2018-19 and a further decline in expenditure of 3.1% to $6.6 billion in 2019-20. 

In 2017-18, total residential building decreased by 3.7% to $19.6 billion, with further declines of 3.3% and 3.9% projected for 2018-19 and 2019-20 respectively. While new private dwelling construction is forecast to decline by an average of 7.8% over the two years to 2019-20, this is forecast to be offset by an average increase of 6.1% per annum in renovations expenditure over the same period.

The average number of people employed in the Queensland building and construction industry (residential dwelling, non-residential building and engineering sectors including contractors, trade contractors and consultants) for the year ending March 2019 was 240,000. The estimated unemployment rate for the construction industry for March quarter 2019 was 3.7%. 

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Building Legislation and Policy Contractor and Consultant tracking survey

To help understand the state of the building and construction industry cycle in Queensland, HPW conducts quarterly research surveys with contractors and consultants registered with the department's prequalification (PQC) system. In the March quarter 2019, Kantar Public surveyed respondents across conditions including employment supply, workloads and labour costs, with all data reported by quarter.

Contractors

Contractors indicated on average they were operating at 66% of capacity in March 2019, a slight increase from December 2018 (64%). In the last three months, 23% of all contractors reported their workload had considerably decreased, down from 27% in December 2018. There was also continued optimism regarding the forward view of work and planning, with 46% of contractors believing their workload would increase over the next three months to June 2019 (49% in December 2018). 

Consistent with December 2018, the majority of contractors (55%) in March 2019 believed labour costs would remain the same over the next three months, while 40% believed they would increase during this period (55 % and 41% in December respectively). The perception that building material costs would increase, rose to 61% in March 2019, still significantly lower than the high point of 71% in June 2018. 

In March 2019, 18% of contractors reported difficulty employing subcontractors overall (up from 17% in December 2018). In the same period, 29% of contractors reported having difficulty finding suitably experienced or qualified subcontractors, representing a continued decline since the peak of 46% in June 2018. Of those contractors experiencing difficulties employing subcontractors, the majority (58%) in March 2019 suggested this difficulty was concentrated across 1-2 specific trades (consistent with December 2018, but up from 47% in September 2018).

The most mentioned trades for those experiencing difficulty employing subcontractors were wall and floor tiling (48%), plastering (42%) and carpentry (33%). Among those respondents who had experienced subcontractor shortages, ‘increased project costs’ and ‘project delays’ continued to be the most reported impacts mentioned by respondents. 

On average, contractors estimated that 41% of their workload over the previous three months was on behalf of local, state or federal government.

Consultants

Workload remained stable in March 2019 with consultants indicating, on average, they were operating at 67% of capacity (down from 70% in December 2018). In the same period, 22% of consultants reported their workload had considerably decreased over the previous three months (up from 13% and 9% in December and September 2018 respectively). The projected change in workload decreased slightly in March 2019 with 30% of consultants indicating their workload would increase over the next three months (39% in December 2018). 

Difficulty in finding work increased in March 2019. More than half of all consultants (57%) reported they were experiencing difficulties finding work, up from 47% in December 2018. 

In March 2019, 24% of consultants indicated they were seeking to increase their staff numbers (down from 34% in December 2018), while the majority (65%) reported they were seeking to maintain their current staff numbers (up from 61% in December 2018). The difficulty employing staff reported by consultants has remained consistent since September 2018 with more than half of all consultants (55%) in March 2018 indicating they would not have difficulty employing staff over the next three months in March 2018.

Of the consultants surveyed, 67% believed fees would stay the same over the next three months (up from 66%), 7% expected them to increase (down from 15%) and 23% anticipated a decrease (up from 16% in December 2018).

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PQC tender activity

Tender activity for Queensland Government building projects over $1 million averaged 4.1 tenderers per project in the March quarter 2019, decreasing from 4.3 in December quarter 2018. Looking at open tenders accepted in the March quarter 2019 (by value) compared to the December quarter 2018, the breakdown by project type was 84% for education-schools (down from 98%), 8% for hospitals/health/welfare (up from 1%), 4% for residential (up from 1%), 3% for authorities (up from nil) and 1% for administrative/offices (up from nil).

The Brisbane region accounted for the largest proportion of all open tenders (by value) in the March quarter 2019, with 62% (no change from the December quarter). This was followed by the Moreton South/Gold Coast (23% up from nil), Far North (6% up from 5%), Wide Bay Burnett (4% up from 2%), Central West (3% up from nil) and Fitzroy regions (2% down from 13%). No activity was recorded in the Moreton North/Sunshine Coast (down from 10%), Darling Downs (down from 4%), Mackay (down from 3%), North West (down from1%), South West and Northern regions (both nil in the previous quarter). 

There was higher than average tender activity for projects within the education-schools sector and within the Wide Bay Burnett region during the March quarter 2019.

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Building material cost comparison

In March quarter 2019, the only building material monitored by HPW that recorded a cost increase from the previous quarter was face brick – clay (1.5%). No materials recorded a decrease during this period. According to the Cordell Building Cost Guide, between March quarter 2018 and March quarter 2019 the only building material to increase in cost was 200mm standard concrete block (4.0%). Materials that recorded the most significant decrease in cost over the 12 months were F8 pine 90mm x 35mm (5.1%), mild steel sections – beams (4.6%) and face brick – clay (3.2%).

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Industry News 

Minimum Financial Requirements for licensing in the building and construction industry 

Through the Queensland Building Plan, the Queensland Government committed to creating new laws that strengthen the Minimum Financial Requirements (MFR) for licensees.

These reforms enable the Queensland Building and Construction Commission (QBCC) to more effectively detect licensees in financial distress and minimise the impact of potential insolvencies and corporate collapses on industry.

Informed by feedback from industry and the community, the reforms are being advanced in phases. Phase 1 commenced on 1 January 2019 and reintroduces mandatory annual reporting, requires larger, higher risk licensees to report decreases in Net Tangible Assets of 20 per cent or more, and provides clarity about calculating a licensee’s assets, such as the exclusion of recreational vehicles.

Phase 2 commenced on 2 April 2019 and implemented reforms to strengthen reporting requirements, particularly for larger, higher risk licensees. This phase will also provide stronger enforcement provisions under the Queensland Building and Construction Act 1991.

For more information please refer to the Minister’s statementBuilding and Plumbing Newsflash 561 and the department’s website which also includes a link to the MFR Framework document​.​​



Last updated 16 August 2019    Creative Commons Attribution 4.0 International (CC BY 4.0)


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