Market Monitor - Construction industry - Australia

Market performance at a glance

Australia

• Residential construction performance is expected to improve in New South Wales and Queensland due to low interest rates, population growth and increasing building approvals.
• Commercial construction is expected to be further affected by the reduction in mining investment and resource related work.
• However this will be offset to some extent by increased growth in telecommunications infrastructure and transport infrastructure.
• Payments in the construction sector take between 90-120 days on average. Notifications of non-payments have increased and the current level is high.
• Construction insolvencies are expected to level off in 2015, but the overall level remains high.
• Our underwriting approach remains cautious as the residential and commercial construction sectors struggle to fill the gap left after the mining-boom ended in Australia, and increased competition leads to margin erosion (especially for new and small businesses).