Residential construction is on the wane but the cranes are still in the sky – moving over into the commercial space.
According to the latest RLB Crane Index, residential construction cranes across the country dropped from 550 to 493 over the last six months, the first reduction in three years.
The slowdown in residential construction is however, being offset by growth in commercial projects including offices, hotels and retail.
“Cranes will rise and fall but we’re still seeing stability in the market,” RLB director Stephen Ballesty told Australian Financial Review.
“It’s certainly encouraging that as the residential index is noticeably dipping the non-residential is noticeably increasing.”
“And that’s encouraging for the broader economy.”
If residential construction continues to fall sharply it is an unknown as to how much slack the commercial sector can pick up.
“If, for whatever reason, there were no more residential commencements in the next two years, that would dramatically change these numbers,” Mr Ballesty said, adding that that was highly unlikely.
In Melbourne, residential crane numbers fell by four, down to 119 in total, but our city’s total number of cranes jumped by seven to 158 thanks to mixed use and commercial developments.
Apartment construction is weakening across the country and building approvals of new apartments, townhouses and semi-detached homes fell by around 8 per cent in the 12 months to February from the previous year.
Trenerry Property Melbourne director Robert DiCintio told AFR the slowdown in residential construction would only impact costs when it steepened, and he says that’s likely to be towards the latter-half of 2019.
“It already has come off but not enough to offset the heavy investment that state and federal governments are making in infrastructure,” he said.
“There will be price declines definitely next year because the residential construction activity will decline quite significantly.”