Australia: Non-residential building approvals up 22% in 2017 - Westpac

Andrew Hanlan, Research Analyst at Westpac, notes that Australia’s building approvals up sharply in 2017, led by offices and public projects, centred in Victoria and NSW.

Key Quotes

“The non-residential construction sector enjoyed better times in 2017, with more projects proceeding, a point that we have highlighted previously. This lays the foundation for building work in the sector to advance solidly in 2018. The long duration of some projects can see work spread out over two to three years.”

“Approvals for non-residential building projects increased by 22% in 2017, to $46.8bn, a rise of $8.3bn on the previous year. That built upon an 11% increase in 2016, up by almost $4.0bn.”

“The lift in approvals in 2017 is the largest annual increase since 2007, post the GFC. While, the 35% lift for the two years from 2015 to 2017 is the strongest two year showing since the 2006 to 2008 period, but that is still well short of the 50% jump from 2004 to 2006.”

“The positive developments in the sector are underpinned by robust population growth and a lift in public investment. In short, the capital stock is expanding to meet the needs of a growing population, as well as to service rapid growth in both international tourism and foreign student numbers.”

“The non-residential building sector is diverse, spanning offices and retail in the commercial segment; factories and warehouses in industrial; and social buildings, including, health, education, accommodation (hotels, aged care, student apartments), and entertainment.”

“Building approvals in 2017 advanced across each of the broad segments, with public projects and offices punching well above their weight.”