Construction boosted by property in April

Conditions in the residential construction sector remain solid and engineering work has also rebounded, Ai Group says.

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The Ai Group and Housing Industry Association Performance of Construction Index (PCI) rose 0.7 points to 51.9 points in the month, from 51.2 points in March, remaining above the 50-point level indicating expansion.

Ai Group head of policy Peter Burn said house, apartment and engineering construction all expanded in April, but commercial building work declined for the sixth consecutive month.

“April saw a modest lift and more balanced performance for the Australian construction sector,” he said in a statement.

“In contrast to the previous month when house building was the only improving sub-sector, in April further – though less spectacular – growth in stand-alone residential dwellings was backed by a steep bounce in apartment building and a rebound in engineering construction.”

Housing Industry Association senior economist Harley Dale noted that house building activity expanded for a fourth consecutive month in April, while apartment building pickup for the first time since July 2016.

He said that indicated conditions in the wider housing construction sector were still solid.

“The longevity of the current home building upturn in Australia is being sustained by the environment of very low interest rates and continued gains in employment,” Mr Dale said.

“Delivering a sufficient supply of new dwelling stock over the long run is vital to Australia’s future prosperity and we look forward to positive proposals in next week’s federal budget with respect to unlocking more affordable housing solutions.”

The index showed new orders grew in April after falling to a five-month low the previous month, and deliveries lifted solidly to the strongest rate of expansion in almost two-and-a-half years.

Ai Group said pressure on builders from rising wages and input prices were continuing to be passed on through selling prices, while strong competition in tender pricing was trimming profit margins last month.