Cairns construction industry cautiously optimistic despite downward trend in building approvals
Master Builders says a strong Cairns economy and large projects will help drive demand in the construction industry next year, despite figures showing building approvals are down.
Latest Conus/CBC Staff Selection Trend figures show in October, the residential building approval trend was unchanged at 55 for a 12.2% decline on the year.
The figures are vastly different to September analysis from Herron Todd White, which pointed to a 47.9% decline.
Conus economist Pete Faulker told Tropic Now that’s largely because Herron Todd White’s analysis doesn’t take into account approvals from the Douglas Shire, to allow for consistency with pre-de-amalgamation data.
“The decline in Cairns is broadly in line with what is happening across Queensland,” he said.
Figures from Master Builders Queensland also show approvals are only slightly down compared with this time last year.
Far North Queensland manager Sharon Vella told Tropic Now Nova City’s apartment approvals contributed to an April spike.
“There was a large spike in April but the extra work has been broader than the one project,” she said.
“Unfortunately it seems to now be falling again.”
Ms Vella said the region’s strong economic fundamentals are encouraging construction confidence.
“The tourism industry is enjoying strong growth and unemployment is low," she said.
“There are a number of large projects, besides Nova, that will help drive demand going forward."
Construction on Nova Lights, the first of seven towers included in the project, has seemingly stalled, but Ms Vella said approvals generally do correlate to actual construction work.
“Nova Lights have had to go through an extensive redesign process to increase the amount of three bedroom apartments to meet the markets demands.
“They are taking out a lot of the one bedroom apartments and offering more three bedroom apartments,” she said.
“While the Australian Bureau of Statistics doesn’t provide a regional breakdown for commencements, comparing building approvals to commencements at a state-wide level shows that historically, 98% of approvals commence.”
So what is the outlook for 2019?
It’s a mixed bag, according to Master Builders.
Ms Vella said the 12 months ahead hold plenty of promise.
“Low rental vacancy data from the Real Estate Institute of Queensland tells of a market in under-supply and there are a number of large projects expected to help drive demand going forward."
Those projects include Crystalbrook Collection's Bailey and Flynn Resorts in Cairns and the super yacht marina in Port Douglas as well as Kuranda's Kur-World, the Botanica development at Caravonica and a 500-million dollar Dunk Island revamp.
However, she said the tightening of lending rules is making it increasingly difficult to secure the money needed for new construction.
“Builders are telling of many new home contracts that are falling over from the lack of finance," Ms Vella said.
“Also, new onerous building legislation that is soon to take effect will impose still more costs, hampering the ability to deliver new projects.”