Queensland's construction industry might not be in the best shape to handle the impact of the COVID-19 outbreak on its housing market and the economy, according to experts.
A report from the Real Estate Institute of Queensland (REIQ) said that total dwelling approvals in the state have dropped by 1.8% in March.
“A possible culprit could be the predicted halt of immigration, but that fails to explain why Australia as a whole still saw an increase in that same period,” REIQ said.
While Australia is starting to recover from last year’s slump in approvals, Queensland has failed to keep up. On an annual basis, dwelling approvals across Australia grew by 1% – Queensland, on the other hand, experienced a decrease of 7.8%.
Paul Bidwell, deputy chief executive officer of Master Builders, said in the report that the state's residential sector lacks the strong foundations necessary to face the potential risks of the COVID-19 outbreak.
“The 12-month total of dwellings in Australia isn't far off the post-GFC low point – and that's without the impact of COVID-19, which we don't expect to really begin to hit until August or September 2020,” he said.
Bidwell explained that the projections of a high unemployment rate and the slowdown in population growth could potentially drag home construction by 26% this year and 31% next year.
“This will take us down to a level not seen in the 35 years that current records have been collected,” he said.
Mike Roberts, executive director for Queensland at the Housing Industry Association (HIA), said there is a need for the government to introduce stimulus to boost the building industry in the state.
"The long lead times associated with building a home means that stimulus is required now to lessen the impact later in the year. We can't wait until the industry grinds to a halt before a stimulus is introduced; that would be a catastrophe," he said in the report.
Roberts said an economic stimulus is crucial to ensure the security of the residential building industry that employs over 200,000 people.
“The tradies who do the concreting, bricklaying, the carpenters, electricians, plasterers, plumbers and painters will all be out of work. The ramifications for the Queensland economy will be widespread if action isn't taken sooner rather than later,” he said.
The state government recently announced a $400m stimulus package aimed at boosting the local economy and creating jobs.
Premier Annastacia Palaszczuk said that the stimulus boost would see new projects added to the state's $23 billion, 21,500-job pipeline of transport and road upgrades.
“Nothing has been off the table in our response to this crisis. We've spoken to businesses to create a package that will see more than 430 jobs enter the fold at a time when it's never been more important,” she said. “Our laser focus is on managing the impacts of the COVID-19 pandemic, and it's investing in infrastructure and jobs that are crucial to tackling those economic impacts head-on.”