The Property Council yesterday claimed that around 60,000 construction workers are jobless following a three-year recession affecting the sector amid a sharp slowing of housing construction and renovation activity. From the Australian:
ALMOST 60,000 construction workers who lost their jobs amid the global financial crisis are still unemployed, as the sector enters its third year of recession and the nation’s new home building market remains in its most dire state in 40 years, according to the property industry’s peak lobby group.
Trades people and consultants had slashed their staff and were working on “bare bones”, Property Council of Australia chief executive Peter Verwer said.
“The only thing that saved the sector was Building the Education Revolution”…
Despite the BER stimulus…the sector was down about 20 per cent, said Mr Verwer… “There are still about 60,000 people who used to work in the construction sector who are unemployed now.”
Mr Verwer said the residential property development market was also in a dire state…
“It is actually the worst numbers for 40 years,” he said.
Compounding this was that sentiment among first-home buyers was low.
“That’s because of the massive uncertainty as to whether they will be able to pay for their mortgage, and yet, technically, affordability is at a decade-long high and people just aren’t willing to take this next step.”
The Reserve Bank, Treasury and many economists were relying on the home building sector to offer economic support when mining activity eased, but Mr Verwer said this was unrealistic…
While house building was sluggish, the exception was apartments, where in Melbourne there was an argument that too many were being constructed.
But the alterations and additions market was at its lowest point since the numbers had been looked at. Lower levels of alterations and renovations also meant fewer people were purchasing white goods and trade materials.
The slowdown in housing construction has been well documented on this blog and is perhaps best illustrated by the sharp fall in new home sales, which are hovering just above record low levels in rolling annual terms, with detached house sales at their lowest level ever recorded in February (see next chart).
The alteration and addition market also appears to be in a bog, as evidenced by lending for housing renovations, which has trended down sharply since the onset of the GFC (see next chart).
However, the Property Council’s claim that 60,000 construction jobs have been lost do not stack-up against the official employment data provided by the ABS, which shows construction employment only 11,400 below peak (see next chart).
One potential reason for the discrepancy is that the ABS’ data captures construction workers employed in mining-related activities, which have boomed since the GFC. As shown by the below chart, the mining states of Western Australia and Queensland have the highest share of workers employed in construction – 10.1% and 10.8% respectively – which is well above the national average of 8.9%.
Therefore, perhaps what is most disconcerting from the industry’s perspective is the prospect of heavy construction job losses once the mining investment boom begins to unwind later this year.