Queensland and Queensland region construction activity: Quarterly projection update – March quarter 2013 A report for the Department of Housing and Public Works Prepared by the National Institute of Economic and Industry Research ABN: 72 006 234 626 416 Queens Parade, Clifton Hill, Victoria, 3068 Telephone: (03) 9488 8444; Facsimile: (03) 9482 3262 Email: [email protected]April 2013
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Queensland and Queensland region construction activity ... · 1. Introduction 1 2. Private residential construction 9 3. Non-residential building 15 4. Engineering construction 20
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Queensland and Queensland region construction activity:
Quarterly projection update – March quarter 2013
A report for the Department of Housing and Public Works
Prepared by the National Institute of Economic and Industry Researc h ABN: 72 006 234 626 416 Queens Parade, Clifton Hill, Victoria, 3068 Telephone: (03) 9488 8444; Facsimile: (03) 9482 3262 Email: [email protected]
April 2013
While the National Institute endeavours to provide reliable forecasts and believes the material is accurate, it will not be liable for any claim by any party acting on such information.
Contents
Page no.
1. Introduction 1
2. Private residential construction 9
3. Non-residential building 15
4. Engineering construction 20
5. Total construction activity and the regional pat tern 23
6. Prices and labour shortages 26
7. The regional dimension 28
Appendix A: Detailed tables – 2007.3 to 2014.2 39
List of tables
Page no.
1. Queensland construction industry – real quarterly price growth 6 2. Contribution to growth 7 3. Total construction – average annual growth rates by Queensland regions 7 4. Drivers of construction growth by Queensland region 2011-2014 7 5. Queensland construction – Annual growth and % contribution to construction activity by major construction segment 8 6. Queensland population by region 8 7. Value of work done: Residential new construction (including major additions) by region 12 8. Value of work done: Residential other renovations building by region 13 9. Value of work done: Private residential building by region 14 10. Value of work done: Non-residential building by region 19 11. Value of work done: Total engineering construction activity by region 22 12. Value of work done: Total construction activity by region ($ million) 24 13. Value of work done: Total construction activity by region 25 14. Queensland construction industry – real quarterly price growth at annual rates 27 15. Shortage of construction labour by Queensland region 27 16. Formation of construction in Brisbane 32 17. Formation of construction in Gold Coast 32 18. Formation of construction in Sunshine Coast 33 19. Formation of construction in West Moreton 33 20. Formation of construction in Wide Bay Burnett 34 21. Formation of construction in Darling Downs 34 22. Formation of construction in South West 35 23. Formation of construction in Fitzroy 35 24. Formation of construction in Central West 36 25. Formation of construction in Mackay 36 26. Formation of construction in Northern 37 27. Formation of construction in Far North 37 28. Formation of construction in North West 38 29. Formation of construction in Queensland 38
A.1 Private dwelling value of work done: new construction (including alterations and additions) 40 A.2 Private dwelling: other value of work done 41 A.3 Private dwelling: total value of work done 42 A.4 Private non-residential building value of work done 43 A.5 Public non-residential building value of work done 44 A.6 Total non-residential building value of work done 45 A.7 Public sector engineering value of work done 46 A.8 Private sector engineering value of work done 47 A.9 Total engineering value of work done 48 A.10 Public dwelling value of work done 49 A.11 Total construction: value of work done 50
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1. Introduction
This update is for the March quarter 2013. There is a complete set of data available for the September quarter 2012 for all building data. Engineering construction data is available for the December 2012 quarter.
Revisions to data and price base
It should not be assumed that just because the data is available to the September quarter that this will represent the final estimate. Preliminary estimates are continually being revised, especially over the next two to three quarters and, from time to time, the historical data can be significantly revised.
It should also be noted that the price base is the 2010-11 year.
The world economy
The long slow recovery of the world economy from the Global Financial Crisis (GFC) appears to be gaining momentum. In the main this reflects the fact that the negative impact on growth of the fiscal consolidation/austerity policies, introduced in late 2010 and through 2011, have largely been reflected in growth rate outcomes. As a result, world economic growth is expected to increase from 2.9% in 2012 to 3.5% in 2013. The majority of countries are expected to experience some increase in economic growth. The major exceptions are the countries in the Euro Zone.
The momentum is expected to be carried over into 2014 with the main Euro economies experiencing acceleration in their growth rates. For example, the German growth rate is expected to increase from 0.7% in 2013 to 1.5% in 2014, while France’s growth rate will turn positive at 0.7% after a contraction in that economy in 2013. As a result, world economic growth is projected to be just under 4% in 2014.
There are a number of risk factors which would result in significantly lower growth outcomes. One is further Euro instability from the flow-on effects of the Cyprus policies. If bank depositors in Spain, Italy, etc. expect that they will suffer a Euro capital loss, as was the recent case in Cyprus, then there is likely to be a repeated crisis over 2013 and 2014 which will continue until the European Central Bank is given the dejure powers to operate as per a standard national central bank. That is, the power to support the banking system as a lender of last resort so as to give full confidence to the banking system.
A second risk is the United States, where the inability of the national political institutions to reach agreement on fiscal policy settings will erode confidence in the economy.
The third risk is military conflict in the China Sea.
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Figure 1: World GDP growth (%)
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Per cent
The national economy
The Australian economy is currently growing at a quarterly trend rate of growth at 0.6% per quarter, or 2.7% on an annual basis. The large turnaround has been the slow growth in consumption expenditures which, over the second half of 2012, has slowed to 0.2% per quarter or one-third of its quarterly growth rate over the period since the end of 2008. Exports were the major source of growth over the second half of 2012.
It is expected that over the first half of 2013 the trend rate of growth will remain subdued. However, over the 2013-14 fiscal year, growth will accelerate to 0.8% per quarter, or 3.6% at annual rates. The main driver of growth will be consumption expenditure, which is expected to recover to 0.6% per quarter. This will be due to the impact of the current low interest rates reducing household debt and debt service costs to income ratios providing the incentives and capacity of households to reduce their current relatively high savings ratios. However due to slower export growth and the peaking in resource investment outlays the overall GDP growth will be similar to the 2012-13 projected outcome of 3%.
The labour market is likely to remain relatively weak, with slow increases in the headline unemployment rate likely. This will ensure that whatever acceleration in growth occurs, it is likely to be a modest acceleration.
The projected recovery in the world economy is likely to be an essential ingredient for any acceleration in the Australian economic growth rate.
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The Queensland economy
The latest data suggests that the underlying growth in the Queensland economy is running at close to 4% on an annual basis. Over the next six quarters, to the middle of 2014, the annualised growth rate is projected at between 3.5% and 4.5%. Over these quarters private consumption growth is projected to average just under 4% per annum. The growth in public consumption will be considerably slower.
Australian GDP growth rates Queensland GDP growth rates
4
Queensland construction forecasts
Based on the latest data, total Queensland construction activity increased by 20.4% over 2011-12.
In the September quarter 2012 Queensland construction expenditure declined by 3.1% compared to the June quarter 2012 after rising by 5.6% in the June quarter compared to the March quarter 2012. Preliminary estimates for the December quarter 2012 indicate total construction expenditure of $14.7 billion a rise of 3.0% compared to the September quarter 2012. Residential construction expenditure declined by 10.3%, non-residential construction expenditure declined by 7.1% and engineering construction grew slightly by 0.5% in the September quarter 2012 compared to the June quarter 2012. Preliminary estimates for the December quarter show residential construction growing at 9.3%, non-residential construction growing at 2.3% and engineering construction growing at 0.9%.
The next two fiscal years show declines in non-residential expenditures, the decline for 2012-13 is $700 million and the decline for 2013-14 is $430 million. For private residential construction a decline of $258 million in 2012-13 is followed by a healthy increase of $1.8 billion in 2013-14. A large $2.6 billion increase in engineering construction expenditure for 2012-13 is followed in 2013-14 by a decline of $947 million.
Over the 2012-13 fiscal year Queensland construction activity is projected to grow by just 2.8%. This is followed by 0.7% growth in the following fiscal year. The average annual growth rates for total construction from 2011 to 2014 are projected at 8.25%, significantly higher than the average annual growth of 5.2% for the 1993 to 2011.
Compared to the previous report there is a 3.7% upward revision to the level of Queensland construction activity in 2012-13, which is consistent with the upward adjustment to the 2012-13 growth rate of 3.3%. For 2013-14 there is an upward revision to the levels of 3.2%.
Table 2 outlines the contribution of the various construction sectors to construction growth. The main driver for construction growth over 2011-12 was engineering construction with a $10 billion increase in expenditure. This represents 110% of total construction growth. Dwellings increase total construction expenditure by $64 million but non-residential construction reduced total construction growth by $612 million in 2011-12. In 2012-13 dwelling construction and non-residential construction both have a negative contribution to total construction whilst engineering construction contributes $2.6 billion. For 2013-14 dwelling construction contributes almost $1.8 billion to total construction growth this represents over 420% of total construction growth as both engineering and non-residential have negative contributions.
Construction prices rose by 0.6% over the December quarter this followed growth of 3.9% for the September quarter. Prices are projected to remain steady through the projection period. Construction prices for housing have risen by 5.2% and 3.2% for the September and December quarters respectively. Over the next three quarters prices for residential construction will fall by an average of 0.2%. Non-residential construction prices have declined for each of the last four quarters, positive growth in non-residential construction prices is not projected until September 2013. In contrast to the other sectors, engineering construction prices will continue to grow through to September 2013.
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Population growth is a major driver of construction growth and also the panacea to labour shortages. Queensland population is projected to grow by 4.1% from June 2012 through to June 2014. The fastest growing regions are Mackay at 5.6% and West Moreton at 5.1% with 10,000 and 5,000 increase in population respectively. Brisbane has the largest growth with an 80,000 population increase.
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Table 1 Queensland construction industry – real qua rterly price changes (%)
The latest data indicates that for 2011-12 total private Queensland residential construction activity grew by 0.5%. This is in sharp contrast to the decline of the previous year of 12.9%.
For private dwelling expenditure a decline of 10.2% occurred over the September quarter 2012. The September quarter level of $3,257 million was 37.5% below the peak of September quarter 2008 just before the onset of the GFC, and lower than the trough of June 2011. For December quarter 2012 preliminary estimates indicate growth of 9.3%.
In 2012-13 private dwelling activity is projected to exhibit a decline of 1.8%. This is followed in 2013-14 with growth of 12.7%. A contributor to this will be the ongoing low interest rates. There is a 2.0% upward revision in projected dwelling activity in Queensland for 2012-13. For 2013-14 the projection for Queensland dwelling activity has been revised upwards by 2.7%.
In the September quarter 2012 new private dwelling construction fell by 11.6% compared to the June quarter, for the December quarter new private construction rose by 8.7% whilst other work done fell by 8.9% for the September quarter and rose by 16.0% for December quarter 2012.
The outlook for 2012-13 is a decline in renovation expenditures of 6.1% and for 2013-14 growth of 7.7% is projected. The new construction profile shows growth of 1.3% for 2012-13 and 15.9% for 2013-14.
Figure 3: Queensland dwelling – new construction a pprovals
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Figure 4: Queensland established house prices
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Figure 5: Queensland housing rental vacancy rate
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Figure 6: Queensland – new dwellings
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Table 7 Value of work done: Residential new constr uction (including major additions) by region– chain volume measure 2010-11 reference year ($ million)
Based on the most recent data for 2011-12, total Queensland non-residential construction activity decreased by 8.0%.
For the September quarter 2012, the level of activity for the total sector was 7.1% below the June quarter this is now the third consecutive quarter of decline. However, this trend has reversed with December quarter growth of 2.3%. Private non-residential construction expenditure declined by 1.9% over the September quarter but preliminary estimates indicate this rose by 7.8% over the December quarter, the figure for the public sector was a decline of 7.9% for the December quarter.
Queensland’s non-residential building activity is projected to fall by 9.9% over 2012-13 with another 6.7% fall projected for the following fiscal year. Over the two years to 2013-14 declines in public sector expenditure accounts for $736 million of the total decline of $1,129 million in non-residential expenditure.
There has been an upward revision to non-residential total building activity of 7.4% in 2012-13. There has been an upward revision of 5.3% in the projected level of activity for the 2013-14 fiscal year.
Major projects currently under construction are; the $1.8 billion construction of the new 750- bed Gold Coast University Hospital, the $1.4 billion construction of the new 359 public-bed Queensland Children's Hospital, the $1 billion ICON Ipswich – CBD renewal and the $889 million 240 extra kindergarten centres.
In real terms over the last six months the value of non-residential building projects under construction or committed have risen by 13.7% or $256 million, projects under consideration have declined by 51.4% or $284 million.
Over the three months to December the value of non-residential projects listed as completed was $1 billion. There was $2.6 billion of new projects under construction, giving a net increase of $1.6 billion.
The major non-residential projects completed over the December quarter are; the expansion of Brisbane airport's domestic terminal and the redevelopment of the Horizon Shores marina each valued at around $500 million.
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Figure 7: Queensland non-residential projects unde r construction, committed and under consideration (at quarterly construction rates) – $ million
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Figure 8: Queensland non-residential building appr ovals and work done
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Figure 9: Queensland private non-residential build ing
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Figure 10: Queensland public non-residential build ing
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Figure 11: Queensland total non-residential buildi ng construction approvals
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Table 10 Value of work done: Non-residential build ing by region – chain volume measure 2010-11 refere nce year ($ million)
Based on recent data, in 2011-12, total Queensland engineering construction activity increased by 43.6% over the previous fiscal year.
For 2012-13 the expected growth rate is 7.5% followed by a 2.6% decline in 2013-14. There is a upward revision in expenditure of 4.0% for 2012-13 compared to the level of activity expected in the previous bulletin and a upward revision of 3.2% for 2013-14.
In the December quarter 2012 the level of private engineering construction expenditure was 11.4% above the level prevailing in the December quarter 2011. In 2011-12 public sector engineering expenditures increased by 13.1%. The profile over the next two years is one where private engineering expenditure is projected to increase by 9.7% for 2012-13 and decline by 4.1% over 2013-14, and public sector engineering expenditure is projected to decline by 3.2% over 2012-13 and increase by 6.3% over 2013-14.
The new major construction projects commenced over the December quarter were the $8.3 billion "China First Coal Project’, the $2.2 billion Nammuldi iron ore mine expansion and the $250 million New Brisbane port facility.
In real terms over the last six months the value of engineering projects under construction or committed have risen by 8.8% or $1159 million, projects under consideration have risen by 10.1% or $615 million.
Over the June quarter the value of engineering projects listed as completed was $7.3 billion and the value of new projects under construction or committed was $8.7, giving a net increase of $1.3 billion.
The major engineering projects that have been completed over the December quarter are; $3.9 billion Queensland infrastructure repair from early 2011 floods, the $1.3 billion New Parallel Runway project at Brisbane Airport and the $1.3 billion Connors River Dam and Pipelines project.
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Figure 12: Queensland engineering projects under c onstruction, committed and under consideration (at quarterly construction rates) – $ million
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Figure 13: Queensland total engineering – work yet to be done
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Table 11 Value of work done: Total engineering con struction activity by region – chain volume measure 2010-11 reference year ($ million)
5. Total construction activity and the regional pat tern
As noted above, total construction activity in Queensland is projected to grow by 2.8% in 2012-13, with a 0.7% rise in 2013-14.
Over 2012-13, total construction activity in Brisbane is projected to decline by 19.8% and by 3.7% over 2013-14. In the Gold Coast there is a projected 10.9% decline for 2012-13, followed by a positive growth of 2.8% in 2013-14. For the Sunshine Coast a strong decline of 26.9% over 2012-13 is almost reversed by growth of 25.3% over the following year, giving an average annual decline of just 0.8% over the two years. West Moreton shows an average annual decline of 5.4% for the next two years, while Wide Bay-Burnett showed strong growth over 2011-12, but is projected to show declines over the next two years averaging 3.8%.
The Darling Downs, Fitzroy, South West, Central West, North West and Mackay regions are all projected to have positive average annual growth over the two fiscal years to 2013-14.
The Northern region has declines projected for the next two years of 7.4% for 2012-13 and 17.7% for 2013-14. The Far North region has a decline of 22.4% projected for 2012-13 and a return to growth of 3.8% for 2013-14.
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Table 12 Value of work done: Total construction ac tivity by region – chain volume measure 2010-11 ref erence year ($ million)
The slow construction sector and in particular the labour-intensive dwelling construction sector ensures that the Queensland employment construction labour market will continue to experience labour surpluses over the next two years.
The overall profile now is one of a sector that will remain in overall surplus throughout the projection period. The labour surplus projected for 2012-13 is around 14,300 rising to 15,500 for 2013-14.
This also means that construction costs will fall albeit slightly, as noted earlier.
Utilisation of capacity
Over the next six quarters the demand/supply balance in Queensland construction is projected to be stable. At the end of 2007 when there was an estimated 25,000 shortage of Queensland the number of unemployed Queensland construction workers was 5,000. Currently there is an estimated surplus of 13,000 with the headline unemployed level being 12,000. This situation is expected to continue for the next six quarters.
Figure 14: Queensland total construction activity and Queensland construction industry
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Table 14 Queensland construction industry – real qu arterly price growth at annual rates (%)
2011-12
September 2011-12
December 2011-12
March 2011-12
June 2012-13
September 2012-13
December 2012-13
March 2012-13
June 2013-14
September
Average 2011-12 and
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Actual Forecast
Non-residential building -0.1 2.1 -1.0 -2.5 -0.1 -8.8 -0.1 -0.2 0.1 -1.2 Residential building -3.9 -3.0 -1.6 -3.2 5.2 3.2 -0.3 -0.6 0.3 -0.4 Engineering construction -5.6 4.8 1.0 4.9 4.4 2.9 0.6 0.4 0.0 1.5 Total construction -3.7 0.3 -0.7 -0.7 3.9 0.6 0.0 -0.3 0.2 0.0
Note: Real price/cost growth is the nominal rate of increase less the increase in the Queensland financial demand implicit deflator.
Table 15 Shortage of construction labour by Queensl and region – number ‘000 (shortage is donated by (+ ) and surplus (-))
The previous annual report gave a detailed analysis of the regional dynamics of Queensland construction activity. This update summarises those findings.
Regional construction activity profile – Brisbane
Table 16 indicates that, for the Brisbane region, since the beginning of the GFC in 2008, total dwelling construction has fallen by a cumulative total of $683 million by 2012. Given another sharp fall of $841 million in 2013, the cumulative fall over the 2008 to 2013 period will be over $1.5 billion.
Over the next two years, from Table 6, Brisbane's population is expected to increase by 80,000. This accumulating pressure on the existing housing stock plus the fact that the Brisbane region is in balance in terms of housing affordability (defined as the ability of the average household to generate income from work sufficient to support a mortgage on new dwelling construction) will combine to force a sharp increase in new construction expenditure. As a result, there is a recovery of total construction expenditure in 2014 of $544 million.
The average contribution of total dwelling construction to Brisbane’s total construction growth rate will be -0.4 percentage points over 2013 and 2014.
Over the four fiscal years 2009 and 2012, Brisbane’s non-residential building expenditures fall by a cumulative $253 million. The fall would have been greater if not for the public sector non-residential stimulus. The fall was driven by office project completions and for 2012 the winding back of the stimulus. In 2010 the fall in total non-residential building expenditures explained almost half of the fall in the Brisbane region’s total construction expenditure of 9.7%. A further fall of $1.1 billion in total non-residential building expenditures occurs over 2013 whilst the 2014 period a rise of $108 million.
The completion of road projects reduced the Brisbane region’s expenditures on total engineering by a cumulative $3.0 billion over 2010 to 2014, taking an average annual 3.4 percentage points off the Brisbane region’s total construction activity growth rate for the period.
Regional construction activity profile – Gold Coast
From Table 17 it can be seen that the average annual decline in total dwelling construction expenditure over 2009 to 2012 was over $1.6 billion. This reduced Gold Coast construction growth by an average of 6.6 percentage points per year. Population is expected to grow by 27,000 over the next two years, which should induce an increase in dwelling construction expenditure of over $512 million over the 2013 and 2014 fiscal years, contributing 0.3 percentage points to total construction growth in 2013 and 10.2 percentage points in 2014.
Over the fiscal years 2009 to 2012, total non-residential construction grew by a cumulative $168 million. However three of those four years showed significant declines in construction growth, 2010 with almost a billion dollars of mostly stimulus expenditure in non-residential construction completely countered the losses of the other years. The next two years 2013 and 2014 will see a total decline of $288 million in non-residential construction in the Gold Coast with the winding up of the stimulus construction. In the 2012 fiscal year non-residential construction reduced construction growth by 7.4 percentage points. In 2013 and 2014 the
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contribution to construction growth will be -2.7 percentage points and -3.0 percentage points respectively.
Engineering construction has to a large extent neutralised the declines in non-residential construction, with three out of four years between 2009 and 2012 experiencing positive growth. In 2012 engineering construction contributed 14.4 percentage points to total construction growth, however with growth declining over the 2013 and 2014 fiscal years, the contribution of engineering expenditure to total growth will be -8.6 percentage points for 2013 and -4.4 percentage points 2014.
Total expenditure will decline by -10.9% for 2013, as non-residential building and engineering construction decline. By 2014 the growth in dwelling construction is large enough to outweigh the further declines in the other sectors, leading to growth in total construction of 2.8% for the 2014 fiscal year.
Regional construction activity profile – Sunshine C oast
The past performance and future outlook for the Sunshine Coast is similar to the Gold Coast at least in terms of dwelling expenditures. Between 2000 and 2005 total dwelling construction activity increased by 62%. The average annual decline in total dwelling construction expenditure over the 2006 to 2008 period was $56 million. Over the 2009 to 2012 period a cumulative $743 million was lost from Sunshine Coast dwelling expenditure, reducing total construction growth by an average 5.9 percentage points per annum. The average contribution of total dwelling construction to total construction over the 2013 and 2014 fiscal years will be in the order of 4.7 percentage points. However, most of the growth is projected in the last year.
The average annual contribution of non-residential construction to total construction over the 2009 to 2012 fiscal years was 0.2 percentage points. For 2013 non-residential construction will reduce the total construction growth by 4.6 percentage points and in the 2014 fiscal year non-residential construction will contribute 20.7 percentage points to the total construction growth of 25.3%.
Regional construction activity profile – West Moret on
The profile for West Moreton in terms of construction activity reflects that of a region where the change in population is relatively small on a state-wide basis, that is just under 2000 per annum but accelerating over the period. For the period 2010 to 2012, non-residential building construction made a significant average net negative contribution of -9.3 percentage points to the region’s construction activity growth rate. Engineering, on the other hand, partly offset this decline with an average 5 percentage point contribution to the region’s construction growth. Dwelling construction expenditure declined by a cumulative $43 million over the period. Over the next two years 2012 and 2014 dwelling expenditure will have an average contribution to total construction in West Moreton of 5.3 percentage points. However, total construction growth is projected to decline by 9.5% in 2013 and by 1.3% in the 2014 fiscal years. Non-residential and engineering construction both decline over this period.
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Regional construction activity profile – Darling Do wns
The Darling Downs, in comparison with the other regions, has a unique profile, both in terms of the immediate past and the immediate future. The dwelling and private non-residential building cycle has been, and will be to 2014, more stable than the larger neighbouring regions. Also, the build up in LNG infrastructure supply has started to make an impact. The average annual percentage point contribution of total dwelling construction expenditures on total Darling Downs construction activity over the period 2010 to 2014 is estimated at 2.2 percentage points.
Non-residential construction will have an average annual percentage point contribution of 0.9 to total construction over 2010 to 2014, however 2013 and 2014 have negative contributions of -0.3 percentage points and -0.5 percentage points respectively.
The construction of LNG infrastructure has impacted heavily with a contribution to total construction growth of 66.6 percentage points for 2012, 45.5 percentage points for 2013 and 14.4 percentage points for 2014.
Total construction in Darling Downs is projected to grow by 44.4% in 2013 and by 14.9% in the 2014 fiscal year.
Regional construction activity profile – Northern r egion
Unlike Darling Downs, the impact of the dwelling cycle has been severe. The cumulative fall in total dwelling construction over the three years to 2012 has represented 12.3% of total Northern region construction. The completion of engineering projects leads to a negative 12 percentage point contribution to total Northern region construction activity in 2012 from engineering construction. Engineering will continue to have a negative contribution to construction activity growth in 2013 and 2014.
In the 2012 fiscal year non-residential construction contributed 9.2 percentage points to total construction in the Northern region. For 2013 a figure of 7.1 percentage points is projected, however, in 2014 declines in non-residential construction activity will take almost 18 percentage points from total construction growth.
Total construction in the Northern region declined by 4.8% in the 2012 fiscal year, for 2013 the decline is 7.4% and for 2014 as non-residential construction declines, the decline in total construction will by 17.7%.
Regional construction activity profile – the Far No rth region
The far North region in terms of its economic base has been significantly adversely affected by the impact of the GFC in the so-called Dutch disease where the high exchange rate has adversely impacted on its non-mining trade exposed industries. As a result from 2010 and 2014 the average annual decline in total construction activity in the far North region is estimated at just over 7% per annum, an average of over $150 million per year.
The total cumulative contribution of total dwelling construction activity to the cumulative 16% fall in total construction was 28 percentage points in the four years to 2012. In 2010 this sector contributed a third to the 21% fall in total construction, while non-residential construction contributed 10%.
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Since 2010 when declines in all sectors resulted in the 21% decline in total construction activity, there has been modest growth averaging 2.1% over 2011 and 2012.
Total construction is projected to decline by an average of 9.3% over 2013 and 2014, the largest contribution coming from engineering construction which has an average contribution of -8.1 percentage points, followed by non-residential construction with an average contribution of -5.1 percentage points. Dwelling expenditure is the only sector projected to grow over this period, with an average contribution of 3.8 percentage points, thereby partially offsetting the other two sectors.
Regional construction activity profile – Wide Bay B urnett region
Wide Bay Burnett saw two years of decline in construction activity, following the GFC. Cumulatively 8.4% was lost over 2009 and 2010. Falls in dwelling construction and Engineering construction contributed 9.6 percentage points and 5.5 percentage points to the overall decline. These were partially offset by the growth in non-residential construction over this period which reduced the overall decline by 6.8 percentage points.
In 2012 there was a 28.5% rise in total construction expenditure. Engineering construction was the only sector to show growth in 2012 and contributed 39.4 percentage points to the total. This growth was partially offset by the declines in dwellings and non-residential construction with negative contributions of 6.1 percentage points for dwellings and 4.8 percentage points for non-residential construction.
The cumulative decline in construction activity over 2013 and 2014 will be in the order of 7.5%. The major contribution of -9.7 percentage points to this decline comes from engineering construction as projects are finished. Non-residential construction also contributes -0.1 percentage points. The profile for dwelling construction over 2013 and 2014 is a decline of 1.9% over 2013 and a rise of 4.1% over 2014, the cumulative offset of dwelling construction growth to total construction decline for 2013 and 2014 is 2.2 percentage points.
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Table 16 Formation of construction in Brisbane (CVM $m)