Australian Construction Industry Showing Signs of Weakening

Australian Construction Industry Showing Signs of Weakening

In recent months, crane supply companies in Australia have been reporting the number of outgoing cranes to be slowing in and around Melbourne. While many construction projects are still underway, and there are many cranes out on order, there is more being returned than is going out as of June 2019.

Melbourne has enjoyed a rapid rise in construction of residential, commercial and mixed residence / commercial tower developments over the last 10 years, with 2017 and 2018 one of the strongest on record in terms of new developments undertaken.

A new trend in Melbourne developments is the pairing of large Melbourne construction firms with foreign companies, primarily from Malaysia, which has seen the pace of development rise sharply. These types of projects are also beneficial to boost local investment in the sector.

There is currently no official statistics about the current slowdown, or whether it is only a temporary issue which will resolve now the new financial year in Australia has come and gone.

Employees in the sector though have no need to worry for the time being, with existing projects still going strong, currently there is a large range of tower construction projects being developed in both the inner and central city locations and further out locations such as Coburg, Oakleigh, Box Hill and Moorabbin to name a few, it’s easy to spot existing developments as most Melbourne firms erect illuminated tower crane signage, making each development region and the company developing simple to spot.

In historical terms, Melbourne has been a very slow adaptor to the realities that tower construction is the only way forward. Melbourne is a city that has always placed emphasis on growing outward in single or double story projects, and was planned this way by placing satellite cities early on such as Geelong and Dandenong. Currently as of 2019, these cities are almost integrated into Melbourne due to the growth and land releases pushing the cities land pretty much to capacity.

Prior to 2002, many residential tower developments were undertaken primarily for social housing or central city residences and commerce. In the last 10 years, there has been significant shift towards tower construction as the new normal for new residential and commercial developments.

Countries in South East Asia have been building towers for commercial and residential use since the early 1950’s and have continued this trend ever since, with Melbourne being a very large city, and low to medium cost housing and commercial leases being next to non-existent, it’s hard to understand why it took so long for the old trend of outward expansion to end.

Currently however the pace of development for new apartments and commercial properties is not occurring at a speed fast enough to lower the prices of these properties, and as such most remain in the middle to upper class realms for ownership and leasing / rentals.