Private non-residential building work a standout in NSW: Gareth Aird

Private non-residential building work a standout in NSW: Gareth Aird
Private non-residential building work a standout in NSW: Gareth Aird


On a state basis, NSW is the standout, with private non-residential building work done rising since late 2012.

Work done in the retail, office, aged care and entertainment have driven the increase. More recently the construction of new office space has slowed.

After trending higher since 2011, non-residential building work has declined in Victoria over 2016. The recent decline has been largest in health and warehouses, although this follows strong growth previously. There has been a solid lift in work done in the retail sectors over 2016. Non-residential building work has also risen at a solid pace in Queensland. There has been a particularly large lift in construction in the tourism, education, health and aged-care sectors.

Click to enlarge

Private non-residential building work a standout in NSW: Gareth Aird

Non-residential construction remains soft in both WA and SA. In WA, office building has more than halved as the effects of the mining downturn are still playing out. Despite the decline, office space remains oversupplied in Perth with vacancy rates increasing sharply since 2012.

In SA, construction in the commercial and industrial categories has declined over the past two years. However this is partly offset by a lift in health, tourism and education. 

In the public sector, non-residential construction has picked up a little in most States.

What’s in the pipeline?

The approvals data also shows us the value of building work in the pipeline. Private sector non-residential approvals have lifted strongly since September 2016 for all the broad categories. Approvals translate into actual work done with different lags depending on factors such as the size of the project and the industry. However most approvals translate to work done with a lag of between three and twelve months. So the recent lift in approvals means stronger building activity in 2017.  

Within commercial approvals both retail & wholesale and office approvals have lifted strongly in the States of NSW, Victoria and QLD. Approvals for building in the “other” category have also picked up driven by rising approvals in accommodation, entertainment, health and aged care. NSW and Victoria are behind the increase, with approvals down in Queensland and flat in WA and SA 

Industrial approvals have lifted too, due to rising approvals in Victoria and QLD. In QLD there has been a lift in approvals for factories, warehouses and agriculture. In Victoria approvals for warehouses and agricultural have picked up.

Public sector non-residential approvals have also lifted in recent years. However approvals have turned down a little in recent months. This is largely due a drop in approvals in NSW and VIC 

Going further through the pipeline, the building work yet to be done data shows the estimated value of remaining work on buildings that have been started but not yet completed. The amount of building work yet to be done has been broadly steady over 2016.

The pipeline of commercial building work done has fallen as the amount of office building yet to be done has declined sharply. However there has been an offsetting lift in work yet to be done in the industrial and other category. Within the other category work yet to be done in accommodation and aged care have lifted sharply. And education has risen too. In the industrial category, work yet to be done in factories and agriculture has lifted. 

Gareth Aird is economist at Commonwealth Bank and can be contacted here.

Construction Building Works

Community Discussion

Be the first one to comment on this article
What would you like to say about this project?