As the Australian construction industry lifts itself off the floor after the global financial crisis international property and construction consultants Davis Langdon are predicting increases in tender prices through 2010.

Davis Langdon’s latest quarterly Tender Price Index report, which measures the movement in tender prices across the country, shows a decline of 1.9% during 2009 and forecasts an increase nationally of 1.5% in 2010.

Davis Langdon’s national research manager, Rachel Kelloway, said the Federal Government’s stimulus packages buffered the nation for the worst of the GFC fallout and most sectors of the construction market have remained resilient.

“Given the magnitude of the global economic fallout, the Australian economy displayed relative resilience throughout 2009,” said Ms Kelloway.

“The Government stimulus packages buffered the nation from the worst of the fallout and most sectors of the construction market have remained shaken but not stirred.

“There are certainly strong signs in the construction industry that the worst is over.

“Prices have bottomed out and it is likely that construction costs will begin to rise, albeit modestly, from the final quarter of 2009 and throughout 2010, as contractors seek to raise their profit levels from their current low base.”

The Melbourne market has been positively impacted on by the Federal Government’s stimulus package, low levels of vacancy in the commercial market and pent up demand for residential accommodation.

The outlook for 2010 in Melbourne is positive with a solid volume of construction planned across both the commercial and high-rise residential sectors, and an anticipated tender price increase of between 4-5% over the next 12 months.

Sydney and regional New South Wales construction sector was being hampered by the tight financial conditions, and construction pricing is expected to remain competitive with tender price increases of around 1%beginning to flow through in the second half of 2010 when demand picks up.

Queensland is also experiencing a subdued commercial sector across the state with developers struggling to find finance in Brisbane, south-east Queensland and north Queensland.

The strong Australian dollar has cut the cost of imports, leading to price drops in mid-2009, and these are predicted to remain competitive into 2010.

However, this is expected to be short-lived and prospects do not look particularly bright as experts predict a slow recovery compared to the rest of the country.

 
For further information, contact Meaghan Jones on +61 3 9933 8800 or email mjones2@davislangdon.com.au