High hopes for construction in 2015

Construction activity has been especially strong over recent months, and now it seems that industry experts believe this isn't likely to change any time soon. The Housing Industry Association's (HIA's) Summer 2015 National Outlook found that there was plenty of reason for optimism in the sector throughout 2014, which could well be sustained into 2015.

"National new home building activity is the star of the housing show with a record level of 195,936 new dwelling commencements forecast for 2014-15," said HIA Chief Economist Harley Dale.

"That result would represent growth of 7.7 per cent and cap a third year in a row where new home construction has headed higher."

Conditions have been more mixed in the renovations market over recent months, although there was some room for improvement last year. They recorded a 0.5 per cent gain in 2013-14, which is expected to be followed up by a 0.2 per cent rise in 2014-15.

Renovations had previously hit a ten-year low, meaning demand for boom lift hire and other construction equipment may also have been affected.

Construction is one area that needs to be given the attention and investment it needs if the Australian economy is going to continue to thrive. There are already concerns that land supply may soon start to impact the market, especially in light of the latest HIA-RP Data Residential Land Report.

"The vacant land which is being sold is selling for an increasingly expensive price, remember that it is the high cost of vacant land which significantly contributes to the increasing cost of housing," acknowledged Tim Lawless, RP Data research director.

With the recent drop in the official cash rate, it's possible that construction firms will soon start to notice a further uplift in activity. However, the supply of land will need to be addressed before this situation is able to arise.