Construction industry expands

Construction industry expands

The latest Australian Industry Group/Housing Industry Association (HIA) Australian Performance of Construction Index (PCI) is showing promise for the national building industry.

Since the Reserve Bank of Australia's latest decision to hold the official cash rate at 2.5 per cent for the 11th consecutive month, conditions have been ripe for those wishing to take out a construction home loan in order to purchase a new property.

Of course, strong population growth in some areas has put pressure on housing stocks, meaning that a lift in building activity may only go some way to relieve this pressure.

The latest PCI rose by 5.1 points in June to 51.8 points. Any reading above 50 indicates activity is undergoing expansion - rather than contraction - which is certainly positive news for the industry.

"After a slow start to the year, the Australian PCI has experienced a run of improvements in 2014 and finally broke through that critical 50-point threshold in June," HIA Economist Diwa Hopkins explained in a July 7 statement.

"Underscoring this improvement has been residential construction activity, with house building in particular remaining a continuing source of strength - June represented the 10th consecutive month of growth in activity for this sub-sector of construction."

The house building sector index was 56.6 during May, ahead of the overall PCI.

While new house building has been a source of strength, apartment construction dipped, with a reading of 49.2 points in June.

Non-dwelling building industries have shown positive figures, such as engineering construction, which lifted to 51.1 points - a rise of 16.3 points to June.

The PCI's leap into "growth territory" has been praised by the HIA, and is sure to be welcomed by those seeking home mortgages in coming months.

In the months to come, plenty of commentators, property owners and investors will be keeping a close eye on future movement in the index.

Image credit: andrechinn

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