Australia’s Residential Construction Slows Down

Australia’s residential construction is one of the biggest markets for construction supplies, and recently, they’ve slowed down. There’s been less going around to buy building supplies in Sydney and across the country as the residential activity across the country slowed down, slowing the sector’s growth to the lowest number in a year.

There’s a lot of indicators that’s been impacting the residential construction sector, which was exacerbated by the recent APRA-led crackdown on risky lending. According to the Australian Industry Group’s (Ai Group) Performance of Construction Index (PCI), which dropped to 50.6 in June 2018, the construction sector is the slowest its been in 17 months.

The PCI’s measures monitored changes in activity across the country’s construction sector on a monthly basis, with anything over 50 marking improved activity levels, whilst a number below that means less people going around to buy building supplies in Sydney and across the country thanks to reduced activity. The deviation from the 50 mark also shows how much activity fluctuates.

With a reading of 50.7 at June 2018, the data shows that activity levels still went up, but at the slowest numbers since early in 2017. Though there is some good news, as, in spite of the steep moderation, the activity levels have gone up monthly like clockwork over the time span, Australia’s largest stretch of growth in the history of the PCI measure.

The Ai Group says, however, that commercial construction was still going strong, with its activity growth going up in June, which is reflective of a wide range of projects in that sector either in development or under planning, which include industrial, accommodation and education buildings.

Overall, Australia’s construction sector had a mixed performance, marked by new orders and employment dropping a bit from May. This is notable since construction is one of Australia’s largest employing sectors, alongside healthcare and retail.

The commercial and engineering sectors present marginal growths, with apartment orders falling sharply, though still better when compared from May.

Senior Economist at Australia’s Housing Industry Association (HIA), Shane Garret, says that the residential construction sector slowed down thanks to regulator and government policies, since that particular sector is rather sensitive to such restrictions on foreign investors.