Apartment Construction Declines for 18th Straight Month


The downturn is still weighing on the apartment sector, with construction work on new apartments contracting at an even faster rate last month.

The performance of construction index, published monthly by the Ai Group and HIA, revealed that the construction industry had pulled back for the 13th consecutive month in September, registering a seasonally-adjusted 42.6 points.

An index reading below 50 represents a decline in activity, while a reading above indicates growth.

The weak-performing apartment sub-sector has experienced declining activity over 24 of the past 26 months. Apartment construction contracted at a slightly steeper rate in September than in August—the sector’s 18th consecutive decline.

Despite the low interest rate environment and evidence of a boost in market confidence over recent months, apartment building numbers remain at historic lows.

“We will need to see that improved confidence translate to greater numbers of active market participants in order to halt the contraction in residential building,” HIA economist Tom Devitt said.

The four construction sub-sectors reviewed by the performance of construction index—house building, apartment building, engineering and commercial activity—all remain firmly in “contraction” territory, with sub-50 readings.

Related: Apartment Construction Downturn Has 12pc Further to Run

Index this monthChange from last month12-month average
House building46.22.338.9
Australian PCI42.20.243.2

^Australian performance of construction index, September.

There were some green shoots in home building, which slowed in its rate of decline over September.

“Both the activity and new orders indexes in house building recorded increases in September, suggesting the pace of decline in this part of the industry at least has eased noticeably over recent months,” Ai Group head of policy Peter Burn said.

Outside of residential building, commercial construction declined for a 14th consecutive month amid subdued demand for commercial building projects.

“In view of these generally weak conditions, the case for an acceleration in infrastructure spending is clearly strengthening,” Burn said.

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