The Chief Executive of the Master Builders Association Denita Warn recently stated that the residential construction industry is facing a ‘valley of death’ if there was not a major initiative implemented to support the industry by the Federal Government.
The construction industry employs nearly 10% of the Australian workforce with around 1.2 million employees in the sector. The housing industry was exhibiting strong signs of recovery in 2019 after various government policies made it challenging for developers to securing funding for new projects which had a negative impact on the market from 2014 to 2018.
Now with the economy suffering from the shutdown of many industries, one of those that has been fortunate to remain open has been the construction industry. However, with key economic indicators showing unemployment is set to rise to around 10% in the coming months, the construction industry will be one of the key industries the government will need to have an economic stimulus too and provide support for in the months ahead and well into 2021.
In all this we must not forget the very important demand for property that is derived off the back of positive immigration levels that are needed to support the growth of the Australian economy. In the past 5 years, both Sydney and Melbourne have each had over 100,000 new residents each year and a good portion of that comes from overseas arrivals. Currently international flights to Australia are banned for all accept returning residents and citizens. As a result, migration in 2021 is tipped to fall to around 35,000 which is well below the ideal requirement of 150,000 plus needed to maintain GDP-per-capita growth. It will therefore be essential that immigration recommences in 2021 if not sooner to ensure this vital source of demand for property continues.
The good news is, the Federal Government recognises these issues and appears to be on the front foot with the Treasurer and Assistant Treasurer working on plans for a scheme to resuscitate this critically important industry.