The Queensland residential construction sector will remain sluggish this year but signs point to a recovery by 2021, according to the latest market outlook by Master Builders Queensland (MBQLD).
MBQLD forecasts 31,000 housing starts in 2020, down 6% from the total forecast of 33,000 housing units for 2019.
"This is due to the fact that despite record interest rates, homeowner loans to build a new home and first-time home buyers have both dropped significantly," said Paul. Bidwell, deputy managing director.
Figures from the Australian Bureau of Statistics show that loans for new homes remained lackluster, dropping 8.4% in November, reaching their lowest level since 2012.
However, the recovery is expected early next year and is expected to continue by 2022.
"We anticipate 35,000 debuts in 2021, increasing to 40,000 by 2022. During this period, we expect the changes and additions to continue their strong trajectory," said Bidwell.
Bidwell said these optimistic prospects depended on the performance of the Queensland economy, which is expected to grow at a rate of 2.5%. While consumer spending continues to be weak, improving business investment, employment and population growth will help the state reach its economic goal this year.
The construction pipeline across the regions of Queensland varies. For example, while the Brisbane metropolitan area will continue to attract more jobs, demand is expected to be dampened by lack of investment in residential and non-residential construction.
On the other hand, confidence is increasing in the Gold Coast despite the loss of 18,000 jobs in the region in the past year.
However, there are regulatory policies that could influence the construction industry this year, including changes to the minimum financial requirements (MFR) imposed on builders.
"The overhauled MFR is causing grief to tens of thousands of licensees. It remains to be seen whether these companies will be able to comply with new laws by the end of 2020 and what measures the building regulator will take against those who can't, "said Bidwell.
Another challenge is the next phase of the controversial equity policy in the building industry to be announced mid-year.
"Although there are positive changes, overall, it will be at the expense of many builders and commercial contractors. All in all, it should be a difficult year for the company. 39; industry, "said Bidwell.
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