The September quarter showed a small dip in construction numbers. However, the mortgage brokers serving Baldivis and Kwinana from our Rockingham office didn’t notice any dip in the amount of people applying for home loans. This is because the number of homes built this year is going to end up setting a twenty-year record.
So where is the disparity between the numbers? It is mostly from engineering and mining. Residential construction was only down 1.6% for the quarter, while other construction such as roads, bridges and mines fell 3.2%. Mines are continuing to tighten their belts, as is the Government. The investment phase for the mining industry is beginning to taper down and the Government isn’t approving as many road and bridge construction projects.
Craig James, Chief Economist for CommSec, says the construction industry is poised to have a great 2015. He bases this on a “strong” rise in building approvals in 2014. Mr James is of the opinion that mining and engineering construction will remain slow, but residential construction is slated to pick up a lot in 2015.
Mr James says the economy and especially the Reserve Bank are counting on the housing industry to pick up the slack for mining, commercial and government works construction.
Tom Kennedy, Economist for JP Morgan, feels that home construction will “flatten out” for the year 2014, but remarked that we had benefited greatly in the first two quarters: “We still think you are going to get that boost, (but not of the same magnitude as) the first two quarters.”
What it Means to You
We still feel that the housing industry is in great shape and we think new home construction will continue to help drive the economy. We continue to think that it is still a great time to buy a home while interest rates are still at an all-time low.
Call Smartline Rockingham today to learn more: (08) 9527 1800.