Differences across the Australian construction landscape are becoming more prominent and this is reflected in the state of the residential market across the country. States in the midst of a resources boom are also experiencing high levels of activity in residential development. Demand for residential properties remains high as regional economic growth supports buyers' ability to keep pace with continuing construction cost increases.
But Other regions are experiencing the flipside of the enduring strength in the Australian economy, as construction cost inflation finally takes its toll. Increasing costs, declining yields and affordability issues have resulted in a slowdown for some States.
Rider Hunt tender price indexation shows construction costs have risen sharply in the last three years with further increases to come, led by Western Australia and Queensland. These sharp increases are never more evident than when looking at the rises in residential construction cost.
Persistent skills shortages continue to be a problem facing the whole construction industry, particularly in areas where there is strong competition for labour coming from major civil projects and a flourishing resources sector.
Mandatory requirements for environmentally sustainable development (ESD) initiatives including energy rating are causing some debate as the industry grapples with the inevitable cost increases.
After several years of expansion across all states, there is now a divide in fortunes in the residential construction sector. Whilst the largest markets of New South Wales and Victoria are experiencing a lull of activity, the booming economies of resources-rich States continue to push their residential sectors to new highs.
Read the article Resources Fuel Residential Hotspots published in Residential Developer Magazine by Director Mark Lochran.