Market/Finance News: Rising construction confidence good for real estate development

By the resi financial blog team, 14 May 2014

Construction confidence up in Australia

Returning confidence to the national construction sector has highlighted the overarching strength brewing in Australia's housing market at the moment. This was evident in the latest Master Builders National Survey of Building and Construction, which indicated confidence reached its highest point in six years. 

As the demand for more property continues to grow and new home lending rises, confidence in the national construction sector has risen to a level not seen since March 2008. Following the drop in the official cash rate in August 2013, momentum has been building as interest rates decreased in response. Master Builders Chief Economist Peter Jones said the survey of the March 2014 quarter illustrates the continued rebound of the market. 

"We are seeing key indicators continue to strengthen while others have entered positive territory for the first time in years. For the first time in nearly three years, the proportion of builders reporting higher sales jumped above 20 per cent and builders reported improved profitability of their own businesses crept into positive territory," said Mr Jones in an April 24 statement. 

"Builders' confidence in the prospects for their own business rose for the third consecutive quarter. This is particularly reflective of the residential building sector's response to low rates and is an encouraging trend indicating industry's expectation that business activity will continue to rise over the next six months." 

As the green lights continue to be seen across the nation's real estate market, the growing strength of residential construction projects throughout highlights the rising demand for new property. Victoria, Western Australia and New South Wales were named as three of the strongest states, with the latter seeing an 18 per cent increase in dwelling starts over 2013. 

These results are expected to continue well into the rest of 2014, with renewed economies across a number of states acting as a driving force for continued growth and development. 

Categories: Home Loans, Property Investment