Australian construction companies in for a stellar year

19th May 2015

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Companies in the construction industry are set for a particularly good year, with key indicators revealing more houses being built and more tradesmen needed to build them.

Construction businesses will need to be prepared for an increase in new work coming their way. Handling contractors and building materials requires that companies have a high-quality accounting system to manage such complex and time-dependent workloads - or they may find themselves missing out.

Indicators reveal the construction industry is in for a good economic times ahead.Indicators reveal the construction industry is in for good economic times ahead.

Dwelling approvals up in March

The number of buildings getting approval nationwide reached a 32-year high in March this year. According to Housing Industry Association Senior Economist Shane Garret, in high-density areas, strong construction activity was pushing dwelling approvals to "unprecedented levels".

"New home building continues to benefit from the exceptionally low level of interest rates, as well as strong population growth over recent years in the key home buyer age group," he explained.

According to data collected by the Australian Bureau of Statistics, during March, the seasonally adjusted rate of new dwelling approvals increased most strongly in Tasmania (+42.3 per cent), followed by South Australia (+35.2 per cent), Western Australia (+18.9 per cent) and Queensland (+8.1 per cent).

While other states and territories saw declines in their home approval rates, over the national rate remained steady at 1.8 per cent.

"Nearly 95 per cent of all businesses in the building and construction industry employ fewer than five people."

More work for tradesmen

Analysts at Master Builders Australia forecast there will be $2.4 billion in construction work over the coming decade. The construction industry, which already represents 9 per cent of the total workforce in Australia, will need an additional 300,000 workers by 2021 if it is to meet the demands of the boom in this sector of the economy.

Nearly 95 per cent of all businesses in the building and construction industry employ fewer than five people, this making the industry one of the most important small business sectors. In small companies there is not a lot of time to be tied up in compliance and book-keeping. An accounting system specifically designed for a construction business is a must-have to handle the coming increase in workload.

Housing market sentiments climb

In their latest survey, the ANZ and Property Council found improved housing market sentiment in the most recent March quarter. This is due to a positive outlook for residential property prices coupled with high expectations for housing approval and construction.

Increased market sentiment will keep the residential construction boom going for as long as the population continues to grow and people still want to buy their own home.

The construction industry is therefore in prime position to enjoy good conditions over the next few years. Companies in the sector need to be prepared to handle the increased workload if they are to grow their business.