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Building, construction decline: MBA
Released 25 November 2010

Building and construction work done fell back in the September quarter, and the outlook is concerning as government stimulus spending winds down, according to Master Builders Australia.

Master Builders Australia’s Chief Economist Peter Jones said, “Residential building, after promising so much, runs the risk of turning down as Reserve Bank rate rises wreak collateral damage on slow-lane sectors of the economy supposedly to head off inflationary effects of a possible upsurge in mining.

“Master builders surveys are picking up a renewed sense of pessimism and residential builders are reporting an across the board slowing sales.”

Jones said finance constraints continue to act as a "handbrake" on the building and construction industry due to the credit squeeze and rising costs.

“Engineering construction activity is trending lower although the pipeline of resources-related work yet to be done and government infrastructure spending should cushion the impending fall.”

“For the building and construction industry, it is becoming increasingly uncertain as to whether an upswing in residential building can regain momentum and offset weak non-residential building, particularly as stimulus spending programs begin to wind down.”

He said unless there is urgent reform to address bottlenecks in the residential building market, the strong supply response needed to meet housing demand will not eventuate, with dire consequences for affordability.