Industry Outlook For Queensland's construction industry - Construction Skills Queensland
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Industry Outlook For Queensland’s construction industry
Contents
C
CEO foreword 3 Commercial 8
pressures mount
The housing boom 5
Heavy and civil: 9
the next frontier
A better type of boom 6
The skills crunch 10
The stimulus risk 7
The training response 11CEO foreword
The last 12 months have been a crazy Now more than ever, it’s important to keep upskilling –
both to take full advantage of these busy times, and to
ride for the construction industry. stay ahead of inevitable market changes.
CSQ will continue to support the training, upskilling and
We’ve seen a lot of strange things happen during
reskilling of workers in these highly changeable times.
this pandemic.
The 2021-22 CSQ Training Plan outlines our $48.6M
One of the most dramatic was seeing governments
training and workforce investment to boost the
ignite the biggest house-building boom in living
capability and agility of Queensland’s building and
memory.
construction industry.
Queenslanders have taken advantage of big incentives
and borrowed big to fund building projects that has in
turn seen record housing approvals. Brett Schimming
Chief Executive Officer
None of us could have predicted this turn of events 12
months ago and there is no doubt this boom is causing
some headaches for builders and their clients.
And while the headlines are focussed on the record
numbers of contracts being signed by house builders,
commercial builders are also grappling with the largest
pipeline of projects in a decade.
As well, government infrastructure commitments
are at a decade-high and public projects account for
two-thirds of $12 billion of outstanding civil work in
Queensland.
Yet despite a voracious appetite for talent, employers
simply can’t find enough workers. We estimate the
At this point,
statewide labour shortage at 20%.
This appears to be another consequence of the
it seems likely
pandemic, which has choked the supply of overseas
and interstate migrants. This channel normally adds
thousands of workers to the industry each year.
The addition of Olympics-related projects to the
pipeline, combined with ongoing lockdowns and border
these pressures
restrictions, means there is significant uncertainty
around how long it will take for these shortages to be
absorbed by normal market forces.
will persist until
At this point, it seems likely these pressures will persist
until around 2023. Until then, we should expect projects
around 2023.
to take longer and cost more.
CSQ expected to see a strong training response to this
situation and we have already registered a significant
uptick in enrolments. We have also seen a record
increase in the employment of construction apprentices.
3 Industry Outlook 2021-2022Anatomy of a boom It is impossible to escape the headlines about the building boom that is gripping Australia. The increase in demand for housing-related construction, along with surging house prices and material shortages, has produced a sense of exuberance around the industry. Yet like all others before it, this boom is not uniform and it will not be permanent. Industry Outlook 2021-2022 4
The housing
boom
Driven by record low interest rates and generous These borrowers have wasted no time converting their
government assistance, Queenslanders borrowed new mortgages into projects. At least $10 billion worth
$15 billion for construction-related purposes in the of new housing has already been approved across
12 months to May 2021. This was nearly double the Queensland – a new record. These projects are mainly
amount lent in the previous 12 months. Unlike new houses, often for first home buyers, with a healthy
Brisbane’s recent apartment boom, this lending has dose of renovation activity thrown in as well (Figure 2).
been dominated by owner-occupiers (Figure 1). Queensland’s builders and tradies have already started
ploughing through this pipeline, with house building
activity 20% above normal levels.
Figure 1 Figure 2
$15B lent for construction in last $10B approved for construction in last
12 months 12 months
Construction-related lending, Queensland, monthly Building approvals, Queensland, quarterly
$1.4B $3.5B $800M
$3.0B $700M
$1.2B
$600M
$1.0B $2.5B
$500M
$0.8B $2.0B
$400M
$0.6B $1.5B
$300M
$0.4B $1.0B
$200M
$0.2B $0.5B $100M
$0B $0B $0M
Apr 17
Jul 17
Oct 17
Jan 18
Apr 18
Jul 18
Oct 18
Jan 19
Apr 19
Jul 19
Oct 19
Jan 20
Apr 20
Jul 20
Oct 20
Jan 21
Apr 21
Jul 19
Sep 19
Nov 19
Jan 20
Mar 20
May 20
Jul 20
Sep 20
Nov 20
Jan 21
Mar 21
May 21
Total Housing (LHS) Renovations (RHS)
Owner occupier Investors
Source: ABS Source: ABS
5 Industry Outlook 2021-2022A better type
of boom
Differences are also emerging in the geography of Within Greater Brisbane, the boom is playing-out mainly
this boom. Housing approvals are rising everywhere, on the city fringe in the large greenfield developments
with regional Queensland performing just as well as (Figure 3b). While there will be some renovation and
the south-east corner (Figure 3a). This trend stands infill activity in the established suburbs—particularly
in stark contrast to Queensland’s previous (apartment) south of the river—most of the action in 2021-22 will
boom, which benefited a small party of big-city, be concentrated in the new suburbs around Ipswich,
high-rise builders. Logan-Beaudesert and Moreton Bay.
Townsville and Central Queensland have seen as much
as a threefold increase in the quarterly rate of housing
approvals, while most other regions have seen a doubling
in housing approvals. Even Mackay-Whitsundays, which
hasn’t grown as fast as other regions, has 25% more
approvals than its average in 2019.
Figure 3
A boom for the suburb makers
a. Housing approvals index b. Housing approvals index
2x 2x
1.5x 1.5x
Relative to 2019 avg
Relative to 2019 avg
1x 1x
0.5x 0.5x
0x 0x
May 19
Aug 19
Nov 19
Feb 20
May 20
Aug 20
Nov 20
Feb 21
May 21
May 19
Aug 19
Nov 19
Feb 20
May 20
Aug 20
Nov 20
Feb 21
May 21
Greater Brisbane Regional Queensland Inner Brisbane Outer Brisbane
Source: ABS, CSQ Source: ABS, CSQ
Differences are also emerging in the
geography of this boom – regional
Queensland is performing just as
strongly as the south-east.
Industry Outlook 2021-2022 6The stimulus
risk
This current boom in house building is being fuelled It means that, in the absence of additional stimulus
by people who would have ordinarily built their homes to create a new source of demand, there will be a
in 2023 or 2024. Many of these buyers have been significant reduction in contracts being signed next
empowered by generous government subsidies and year, leading to much less activity in 2023 and 2024.
incentives to bring forward an investment that they
This pullback in demand for new housing will be
likely would have made within the next few years.
magnified by the weak population growth caused by
This sets-up a clear risk for the medium-term. international border closures, as well as the possibility
of higher interest rates.
7 Industry Outlook 2021-2022Commercial
pressures mount
While the headlines are focussed on the record Figure 4
numbers of contracts being signed by Queensland’s Commercial pipeline clogged
house builders, other parts of the industry are also
Value of work in the pipeline, non-residential building
registering very high levels of activity.
Non-residential builders, for example, are struggling $5B
to digest the largest pipeline of projects in a decade.
These projects are concentrated in the south-east
corner of the state (Figure 4). $4B
This trend preceded the onset of the pandemic –
the 12 months to April 2020 saw $9.9 billion in non- $3B
residential projects approved in Queensland. Many of
these projects were delayed through 2020 as a result
$2B
of lockdowns and uncertainty.
While approvals are now falling sharply, there is a
$1B
significant pipeline of work that will keep commercial
trades busy for several years.
$0B
Mar 10
Oct 10
May 11
Dec 11
Jul 12
Feb 13
Sep 13
Apr 14
Nov 14
Jun 15
Jan 16
Aug 16
Mar 17
Oct 17
May 18
Dec 18
Jul 19
Feb 20
Sep 20
Greater Brisbane Rest of Qld
Source: ABS (unpublished)
Industry Outlook 2021-2022 8Heavy and civil:
the next frontier
The heavy and civil sector is one pocket of the industry Government projects now account for two-thirds of all
that may not feel quite so ‘boomish’ right now. Despite outstanding engineering work. This level of government
recent infrastructure announcements from all levels infrastructure commitment has not been seen in over a
of government, we are yet to see any pickup in decade (Figure 6).
engineering construction activity (Figure 5).
However, the future looks much brighter than the past
for Queensland’s civil contractors. It is quite clear that
the future for many of them will rely on the public purse,
not private investors.
Figure 6
Infrastructure commitments at
Figure 5
decade high
Infrastructure boom yet to register Engineering construction work yet to be done, for the public
Engineering construction work done, Queensland, quarterly sector, Queensland, quarterly*
$7B $9B
$8B
$6B
$7B
$5B
$6B
$4B $5B
$3B $4B
$3B
$2B
$2B
$1B
$1B
$0B $0B
Mar 07
Nov 07
Jul 08
Mar 09
Nov 09
Jul 10
Mar 11
Nov 11
Jul 12
Mar 13
Nov 13
Jul 14
Mar 15
Nov 15
Jul 16
Mar 17
Nov 17
Jul 18
Mar 19
Nov 19
Jul 20
Mar 21
Mar 15
Jul 15
Nov 15
Mar 16
Jul 16
Nov 16
Mar 17
Jul 17
Nov 17
Mar 18
Jul 18
Nov 18
Mar 19
Jul 19
Nov 19
Mar 20
Jul 20
Nov 20
Mar 21
Source: ABS *Inflation-adjusted Source: ABS
9 Industry Outlook 2021-2022The skills
crunch
Taken as-a-whole, Queensland’s building industry is The fundamental issue is that there is simply not
now working through a $13 billion pipeline of projects. enough spare labour. The pandemic’s effects on
This is roughly equivalent to the peak of the apartment migration are well known, and it appears the building
boom in 2017. industry has not escaped.
The difference this time is that we are working with This is particularly impacting South-East Queensland.
a much smaller labour force. At the peak of the
Typically, around 9% of South-East Queensland
apartment boom in 2017, there were around 260,000
construction workers are recent migrants to the region,
people in the construction labour force in Queensland.
be it from overseas or interstate. Migrants add nearly
Today there are only 240,000.
10,000 workers to the region’s industry each year. It is
The building sector is shouldering the burden of this likely that these flows have slowed significantly during
labour deficit. That sector is being forced to lift its the pandemic, effectively capping the availability of
productivity by 20% compared to prior to the pandemic. skilled labour.
Why has employment not simply expanded to meet This in turn is felt as acute skill shortages by employers.
the demand? On projects, it shows up as cost increases and delays.
These are now endemic features of the industry and it
It is not for want of hiring by employers.
will take some time for their effects to dissipate.
Our liaison with contractors suggests they are
The addition of Olympics-related projects to the
desperate for talent and willing to absorb as much
pipeline, combined with ongoing lockdowns and border
spare labour as possible. This is supported by an
restrictions, means there is significant uncertainty
industry unemployment rate that is approaching 3%
around how long it will take for these shortages to be
alongside soaring job vacancies (Figure 7).
absorbed by normal market forces.
At this point, it seems likely these pressures will persist
until around 2023.
Figure 7
Construction job vacancies soar
Internet vacancy index, construction, Queensland
200
180
160
Cost increases
and delays are
140
120
now endemic
100
80
features of the
60
40
20
0
industry.
Jan 19
Mar 19
May 19
Jul 19
Sep 19
Nov 19
Jan 20
Mar 20
May 20
Jul 20
Sep 20
Nov 20
Jan 21
Mar 21
May 21
Source: LMIP, CSQ
Industry Outlook 2021-2022 10The training
response
Against this backdrop, we would hope to see a strong This strong intake means there are now more than
skilling and training response as workers seek to move 22,000 construction apprentices in-training across
out of lower-growth sectors into the relatively higher- Queensland - the highest number ever.
performing construction industry. And this is precisely
Another positive side-effect of the pandemic has
what seems to be happening.
been an apparent increase in the interest of workers
Encouraged by generous apprentice incentives in training and upskilling, with CSQ recording a 23%
and a buoyant residential house building sector, increase in enrolments (Figure 8b).
construction employers are employing record
Finally, there are some encouraging signs that workers
numbers of apprentices. In the last quarter of 2020,
are taking training more seriously. CSQ regularly
more than 4,000 people signed-up for a construction
surveys training participants. Historically, this cohort
apprenticeship in Queensland, substantially more than
reports very little interest in undertaking further
at any other time on record (Figure 8a).
training. However, the pandemic has sharpened the
minds of many workers on the importance of keeping
their skills up-to-date to secure their future (Figure 9).
Figure 8
Trainees step up
a. Construction apprentice commencements b. CSQ-funded enrolments, March - December
4,500 30,000
4,000
25,000
3,500
3,000 20,000
2,500
15,000
2,000
1,500 10,000
1,000
5,000
500
0 0
Apr–Jun Oct–Dec Apr–Jun Oct–Dec Apr–Jun Oct–Dec Apr–Jun Oct–Dec Apr–Jun Oct–Dec
2016 2016 2017 2017 2018 2018 2019 2019 2020 2020
2018 2019 2020
Source: NCVER Source: CSQ
Figure 9
Construction workers hungry to train
What would be your main reason for undertaking further training
or upskilling?
40%
2019 2021
35%
30%
25%
20%
15%
10%
5%
0%
Don't intend to study Main reason: career progression
Source: CSQ
11 Industry Outlook 2021-2022Visit: csq.org.au Call: 1800 798 488 DISCLAIMER: Whilst all care and diligence has been exercised in the preparation of this plan, BCITF (Qld) Limited ACN 105 495 387 as trustee for the Building and Construction Industry Training Fund (Qld) trading as Construction Skills Queensland (“CSQ”), does not warrant the accuracy of the information contained within and accepts no liability for any loss or damage that may be suffered as a result of any reliance on this information, whether or not there has been any error, omission or negligence on the part of CSQ, or its directors, employees, agents or sub-contractors. A number of unforeseen variables can affect any projections used in the analysis and, as such, no warranty is given that a particular set of results will be achieved.
You can also read
