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National building commencements are expected to recover after suffering a 12 per cent decline last year, new data from BIS Shrapnel has revealed.
According to the company’s Building in Australia 2011 report, the decline in building activity in 2010/11 has been almost entirely due to the winding down of construction related to the “Building Education Revolution” program.
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This fall-off more than offset the emerging recovery in commercial and industrial building. However, even after the lows brought about during the GFC, it is the recovery in commercial and industrial building which will help to underpin the growth in 2011/12.
“The continuing recovery in commercial and industrial building – up 21 per cent – will be a key driver of the improvement in building commencements in 2011/12, while increased construction in the health sector – up 73 per cent – will also play a part,” BIS Shrapnel managing director Robert Mellor said.
“With the Australian economy largely recovering since the GFC, the environment has become more conducive for commercial and industrial development.
“There is also $7 billion in new hospitals and other health care facilities due to commence in 2011/12, particularly in Victoria, Queensland, South Australia and Western Australia.”
According to Mellor, the contribution from residential building is forecast to be minimal in 2011/12 after being negative in 2010/11.
This is due to the decline in activity after the expiry of the First Home Owner’s Grant Boost Scheme, as well as the winding down of the Federal Government public housing stimulus.
The decline will more than offset an otherwise healthy rise in multi-unit residential starts, Mr Mellor said. That rise is largely due to the improved financial environment which allows developers to be increasingly able to fund apartment projects.
