The value of private construction activity has dropped sharply in the first three months of 2020 according to ABS data released today.
But when you look at the value of construction per capita, it is clear that the construction sector in NSW is in freefall and needs urgent support or the NSW economy is in big trouble.
What is even more scary is that this data covers construction activity in January, February and March – two thirds of which is before the COVID-19 close down was initiated.
There is an urgent need for an unlocking of any private sector capital investment which is ready to commit to jobs and growth in this important jobs-rich sector of our economy.
The graph above shows the drop in total building activity in NSW – before COVID-19 occurred. The graph below shows dollars spent per capita and that shows an even steeper decline.
The NSW Planning System has a lot to answer for. Developer fees and charges (which push the price up for new home buyers) were pushed up and even before COVID-19 kicked in, this data confirms, the property development and construction industry was showing significant signs of illness throughout 2019. Once the impact of the slowest planning system in the nation was added to these costs, it was clear that investors had already started to move investment dollars out of NSW.
Urban Taskforce welcomes the revised push for activity and investment being driven by the NSW Government, but despite some focus on fast tracked projects, the planning process generally remains slow and there is fear in the industry that it might be just too late.
The greatest contribution to public benefit right now is jobs and investment. All the strategic plans in the world are not worth the paper they are written on if there is no investment activity to make them real. The graph below show investment in residential property per capita (ie. taking into account the size of the population) and it shows a steady decline since July 2018.
* Building Activity includes construction of new buildings and alterations and additions to existing buildings. It does not include construction activities not defined as ‘building’ i.e. construction of roads, bridges, railways, earthworks
