Construction News Round-Up - April 2024
Australia & New Zealand Construction News
SBS Podcast: Is Australia building enough homes?
The Australian Government’s target of building 1.2 million new homes over the next five years is already potentially at risk, with a 2% decrease in overall housing approvals in February, including a concerning 25% decrease in approvals to build apartments. High costs of construction materials and labour and high interest rates are believed to be behind the building slump.
The market is expected to improve later in 2024, however it is forecasted that only 1 million homes will realistically be built by 2029, a significant shortfall on the Government’s initial target.
Subcontractors owed millions after Canberra-based builders collapse
Four large Canberra-based building companies have collapsed, leaving subcontractors in the city owed millions of dollars and at risk of insolvency themselves. Affected subcontractors are now speaking up, highlighting that subcontractors are at the ‘bottom of the food chain’, with minimal protections in place to protect their businesses.
Multiple inquiries have been conducted over the years, yet there has been little action to address these growing issues. Subcontractors in Canberra are now meeting with federal politicians to discuss better industry regulations to protect subcontractors in the event of client insolvency.
Australian construction sector sees stabilising costs
A sharp decrease in detached dwelling approvals is supporting a gradual stabilising in national construction costs in Australia, according to CoreLogic’s Q1 2024 Cordell Construction Cost Index (CCCI).
Construction costs rose 2.8% year-on-year, the smallest annual increase since March 2007. Building costs are still 27.6% higher than they were pre-COVID, significantly impacting profit margins on new builds. Costs are expected to maintain at stable levels throughout 2024, signalling a return to normal for the construction sector.
Australian construction workers facing a mental crisis are trying to make a difference
MATES in Construction, a suicide-prevention organisation has reported a significant increase in helpline calls over the last 12 months. This follows a year of high interest rates, labour shortages, supply chain issues, and a cost of living crisis that has put extreme pressure on the industry. Recent research has found that construction workers are at a much higher risk of experiencing mental health challenges.
A number of construction-specific mental health charities are expanding their efforts, now providing on-site outreach sessions, yoga and breathwork free of charge. Whilst a culture of not speaking about mental health was the norm, construction workers are now saying that this is changing.
NZ Government announces easing of construction rules for using overseas building products
In an effort to ease rising costs of construction materials, the New Zealand Government has announced it will be removing the ‘red-tape’ and reducing barriers for the use of overseas building products. Supply chain disruptions, like with the GIB shortage, has led to a number of significant delays and pressures on the NZ construction industry.
Three legislative changes have been proposed, first to recognise “trusted” building product standards, second to require Building Consent Authorities to accept compliant overseas building products, and third to have building products certified through reputable schemes.
Recession, high interest rates affect New Zealand construction industry
New Zealand builders are seeing their work pipelines dry up as people forgo building new dwellings due to high interest rates and an inability to afford the high costs of construction in a recession. The New Zealand Construction Industry Council worries the government's current strategies, such as using more overseas building products, will help to complete builds but not encourage new projects.
Building cost inflation in New Zealand has slowed to its lowest level in eight years, signalling a return to normalcy in the industry. Builders will need to ride out the current storm in order to feel the effects, leading to more inevitable insolvencies before the industry starts growing again.
United Kingdom & Ireland Construction News
Insolvencies of UK builders eases for second consecutive month
The number of UK construction company insolvencies in March 2024 has decreased 24% year-on-year, signalling positive industry recovery and movement towards stabilisation. Firms collapsing last month were overwhelmingly a result of untenable fixed price contracts, with strong profits but significant cost rises.
Despite two months of insolvency decreases, industry experts are still cautious about the future and the ongoing cost of construction. Construction costs are still significantly higher than a few years ago, causing a downturn across new builds.
First rise in UK construction activity for seven months
Data from the latest Purchasing Managers’ Index (PMI) recorded an increase in construction activity in the UK last month, the first rise after six months of consecutive contractions. New construction work has also increased for the first time in 10 months, with more tender opportunities being sent out and a related rise in subcontractor activity.
Agreeable weather conditions and easing financial pressures is influencing developers to push forward with paused projects. Some industry experts are hesitant about this optimism, suggesting that the UK government still needs to address “basic fundamentals” and make a stronger commitment to supporting the construction industry.
Construction technology strategy is key to making the UK a global tech powerhouse
Haman Manak, Procurement Director at Stanmore shares his thoughts on investment and focus on construction technology as a solution to progressing the UK government’s International Technology Strategy. Amidst a very challenging last couple of years, the construction industry should be seeking technologies that increase efficiency, generate revenue and ultimately provide a safety net.
Manak calls upon the UK government to address the construction industry’s slow innovation, provide concessions to start ups within the space, and steer entrepreneurs towards ConTech. As one of the least digitised industries, there is a huge amount of potential in construction technology and the impacts of a focused strategy.
Irish construction sector returns to growth after nine months
According to the latest PMI research, the Irish construction sector grew for the first time since June 2023 last month. Staffing levels have also risen and are now at the strongest rate in the last 12 months. Experts are attributing the growth to continued strong employment and rising optimism across the sector.
There is a contrast in performance between residential and commercial constructs, with housing targets unlikely to be met at current construction levels. Commercial builds, however, are performing well with many partially finished office blocks re-starting construction.
Clea Boyd-Eedle