Building industry 'goes gangbusters' The Age - theage.com.au

Building industry 'goes gangbusters'
May 29, 2008

THE nation's infrastructure binge helped fuel a record pace of construction for the March quarter.
Figures from the Bureau of Statistics show total construction rose 2.3% in real terms to $29.96 billion.
Activity was underpinned by engineering projects such as roads and bridges. The ABS said engineering work completed in the first three months of this year stood at $13.5 billion, up 5.2% on the previous quarter.
There was also good news for people locked out of the housing market. The volume of outstanding projects to build houses and units hit record levels in dollar and inflation-adjusted terms.
Economists said this could ease the rental crisis gripping most capital cities, including Melbourne, where a lack of housing is forcing up rents.
"Order books in the housing sector hit new highs in the March quarter, raising the hope that the extra supply of homes coming onto the market will put downward pressure on rents," CommSec chief equities economist Craig James said.
"Overall, order books are exceedingly healthy, with the value of both residential and commercial projects at new highs."
Research by Residex shows that Melbourne topped the nation for the steepest rise in rents for houses and units in the past year. For the year to April, the median weekly rent for a house in Melbourne increased by 22.95% to $375.
Mr James said while much of the focus was on the resources boom, it was clear from the ABS figures that the wider construction industry continued to "go gangbusters".
He said buoyant conditions should not feed into inflation. "While cost pressures are a concern for all industries, the good news is these pressures are still well contained in construction," Mr James said. "CommSec has estimated that construction costs were up just over 5% on a year ago in the March quarter, close to two-year lows."
Mr James said companies reliant on construction had plenty of work on hand.
"The gloom and doom reports on the housing sector are overplaying the situation," he said.
"Clearly, more homes and apartments need to be built, given our rising population, but it appears that we are slowly rising to the challenge."
The Federal Government has signalled its desire to boost the nation's infrastructure, announcing in the budget the $20 billion Building Australia Fund.
Robert Papaleo, director of strategic research at property group Charter Keck Cramer, said that while the ABS figures showed strong residential building levels, underlying demand in Victoria was racing ahead even faster.
"Also, there is a capacity constraint in Victoria," Mr Papaleo said.
"Capacity is being diverted to more lucrative types of work, particularly in mining and, perhaps to some degree, infrastructure."
He said the political focus on infrastructure meant more resources would be devoted to the sector, reducing the ability of the housing sector to deliver new stock.

This artical revists the concept of growth and points out how further growth is expected due the growing mineral boon.