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Melbourne lockdown construction impact not so severe: BIS Oxford Economics


The September quarter ABS Construction Work Done statistics have shown that Melbourne’s prolonged Stage 4 COVID-19 restrictions did not impact results as badly as predicted, according to BIS Oxford Economics.

The ABS Construction Work Done data found that total building activity dropped by two per cent, but was stronger than BIS Oxford Economics predicted.

The estimate for construction work done in the September quarter was $51.18 billion.

“This result was propped up by stronger than expected activity in Victoria, demonstrating that the lockdown impact in Melbourne wasn’t as severe as first thought,” BIS Oxford Economics’ senior economist Nicholas Fearnley said.

Victoria had the second highest value attributed to construction work done in the September quarter at $14 billion, behind New South Wales at $15.5 billion.

With residential and non-residential building falling by one per cent and 3.4 per cent respectively, Fearnley said declining conditions are here to stay.

“The lag between the slowdown in approvals due to the coronavirus pandemic and actual construction activity is expected to be at least six months,” he warned.

“Although, we expect government stimulus measures such as HomeBuilder, and record low interest rates, stamp duty policies in both NSW and Victoria to help cushion the downturn, non-residential building construction activity fell 3.4 per cent over the September quarter. We expect non-residential building construction activity to remain weak over 2021.”

Fearnley said Western Australia and the Northern Territory attribute most of their construction activity to mining.

Engineering (non-building) construction activity fell 3.3 per cent seasonally adjusted over the September quarter, pulled down by a 7.2 per cent fall in privately funded work,” he said.

“This fall is likely driven by a slowdown in electricity investment, as small (quarter over quarter) changes in both WA and NT when compared to other states point to mining construction activity remaining relatively stable.

“We expect mining investment to grow over the coming years.”

The Northern Territory was the only state that saw growth in the value of construction work done at 3.9 per cent.

Government stimulus activity is likely the reason that publicly funded engineering grew by 3.9 per cent, Fearn said.

“We expect publicly funded work to continue growing over the coming years as work on major infrastructure projects ramps up.”

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