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Apartment construction to drop 50%: BIS Oxford Economics
Australia’s building market will shift into reverse over the next three years led by a collapse in residential starts, predict economists at BIS Oxford Economics (BIS).In its Building in Australia 2017-2032 report, BIS economists forecast high-rise apartment construction will halve and overall building will decline 17 per cent over the next three years.“Overall, we expect 2017-18 will be the peak in high density residential completions, but that part of the market will slump around 50 per cent in the subsequent two years,” said Robert Mellor, Managing Director at BIS Oxford Economics.“By contrast, a milder decline is forecast for detached houses. The saving grace is that the floor in residential commencements is likely to be higher than in previous busts,” he added.
Forecasts are more bearish than those in the latest Federal Budget and last week’s Reserve Bank’s statement accompanying its decision to keep interest rates on hold, Mr Mellor noted.
“The record breaking residential building boom is already turning, offsetting growth in starts for non-residential building through 2016-17,” said Adrian Hart, BIS’s Associate Director of Construction, Maintenance and Mining.
“But with residential building activity in particular now set for a sharp decline along with its multiplier impacts on industries such as construction, manufacturing and retail,the Australian economy will need new investment drivers to support growth and employment,” he said.