Employment and activity in the construction sector is surging even as more builders go bust, but the industry says a downturn looms as higher interest rates deter people from buying new homes and renovating old ones.
The sentiment appears at odds with the surge in insolvencies in the sector, but Housing Industry Association chief economist Tim Reardon said builders were going under because of their dependence on fixed-price contracts, rather than a lack of demand. The surge in building activity reflected work done on homes sold more than a year ago, before the Reserve Bank of Australia started increasing interest rates.“There’s almost double the volume of homes currently under construction compared to typical volumes pre-pandemic,” Mr Reardon said.
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