The media recently has been full of doom and gloom about the slumping housing market. Housing approvals have continued to fall, which will inevitably lead to a reduction in domestic work in the coming months.
The news, however, is certainly not all bad.
Industry Trade & Projects
Despite what the media says, the ongoing trade war between China and America is a good thing for the Australian economy. The American economy is positively humming and iron ore prices (think Pilbara) are at a 5 year high. The resulting weakening of the Aussie dollar is also making exports look good, especially minerals, services and agricultural. Expect tourism to follow suit as the dollar continues to weaken.
The housing slump has prompted the RBA to look at an interest rate cut – historically speaking this is typically followed by a resurgence of building activity. The housing shortage in the major capitals is also growing worse, so realistically, the domestic slump is likely to be short-lived.
The real hero for the construction industry, however, is infrastructure. Based on current ongoing and fully funded projects, there is unlikely to be any real weakening of the industry for at least 4-5 years. Examples of this include:
Both the last two state government elections (VIC and NSW) were largely contested by parties promoting their infrastructure agendas, and current indications are that the upcoming federal election will be no different. This suggests that infrastructure investment will only continue into the foreseeable future.
There are plenty of reasons to be positive about the future of our industry. Keep an eye out for upcoming newsletters in which we will explore some of these major projects in detail.
Ash Collins – Managing Director
Tuff Stuff Australia