CONSTRUCTION INDUSTRY

An Economic Update by MBA Australia Chief Economist, Shane Garrett

Like the rest of Australia, the ACT has been grappling with an unfavourable change in fortunes over the past year. In a little under a year, the RBA’s cash rate has increased by a total of 3.50 percentage points – the largest and quickest interest rate hike we’ve seen since the 1990s. Because of recent stresses in global financial markets, it is now possible that only one more interest rate increase could be in the tank. In fact, current financial markets pricing indicates that by this time next year, interest rates will be lower than they are at the moment. However, we know the industry is resilient and Master Builders is working closely with governments to reduce any pinch points, particularly around supply constraints.

Against this backdrop, Master Builders Australia has recently released its forecasts for building and construction activity in the ACT for the period out to 2026-27. During 2021-22, work began on a total of 5,865 new homes across the ACT – an increase of 12.9 per cent on the previous year. Unlike most parts of Australia, detached houses account for only a minority of the new homes built every year. Of the new homes started in the ACT during 2021-22, less than one-third were detached houses.

We are enduring a pretty painful reversal in new home building across the ACT: we expect that new home building starts in the ACT will plummet by 55 per cent during 2022-23, equivalent to just 2,660 commencements. However, the pace of reverse is twice as fast on the higher-density side of the market. As a result, we anticipate that detached houses will end up accounting for almost half (43.2 per cent) of all new home commencements during 2022-23 overall. Our industry’s increased dependence on detached houses over the next few years makes it even more important that the supply of fresh land lots is kept coming at a brisk pace.

In addition to higher interest rates, the significant fall in Canberra house prices over the past year (-9.8%) is making it more difficult to get new projects rolling. As we move into the second half of the decade, it is likely that higher-density home building in the ACT will again find momentum. There are a few reasons for this. Once interest rates have peaked, the conversation will then turn to when they are likely to start dropping again – and by how much. We may be only a few months away from reaching this point. Whenever it happens, this will be a good thing for market confidence. In addition, overseas migration to Australia is starting to recover to pre-COVID levels and Canberra can look forward to welcoming our share of the new arrivals. The immediate effect of this will be to boost demand on rental accommodation locally – with higher density home building projects reaping the benefits. The growing demand for rental accommodation is already becoming apparent – over the year to December 2022, rental prices grew by 6.0% across Canberra, the fastest increase in over a decade.

There is some evidence that the strengthening rental market is tempting housing investors: during the three months to February 2023, housing investors accounted for over one third (35.1%) of loans used to buy existing homes in the ACT. Over time, greater housing investor participation in the market will be favourable for higherdensity home building demand. However, the typical size of owner occupier loans ($621,200) is larger than for housing investors ($609,300) when it comes to the purchase of existing homes. Tellingly, the average loan size for residential land purchase in the ACT ($451,400) is larger than in every other state and territory.

The improvement in our economic foundations over the medium term will drive a fairly sustained recovery in new home building. We project that the annual volume of new home starts will reach 6,000 in 2026-27, with higher-density homes accounting for almost three quarters of this output. It is important to point out that things could end up less favourable than this, given that expectations around interest rate increases and economic growth have become more glum since the start of the year.

Vale John Hailey

A Pillar of Patience, Passion and Wisdom in Construction

Co-Founder of Manteena and former Master Builders ACT Treasurer, John Hailey, passed away on 13 December 2022, aged 81 years old.

John excelled in his role as Master Builders ACT Treasurer for over 15 years and was awarded the well-earned honour of MBA ACT Life Member in 2002.

John was a dedicated family man, who enjoyed spending time with his wife, Jill, and raising his young family. Together, John and Jill established Manteena in 1979. John built a reputation for quality and community mindedness.

John’s project highlights include:

> McKay Gardens Professional Centre in Turner—John’s first major commercial project

> Australian Service Nurses National Memorial on Anzac Parade—John was particularly proud to be associated with this project because his three aunts served on the Hospital Ships during World War I

> Pathology Building at Woden Valley Hospital—John enjoyed the technically-challenging aspects of this important health project

> Condamine Court Redevelopment—John was proud to pioneer prioritised-sustainability in ACT Housing redevelopments with this project.

John dedicated the majority of his working hours to managing Manteena where he passionately advocated for his clients, while at the same time promoting fairness for consultants, suppliers and subcontractors alike. He was tremendously supportive of the local building industry. John served on many industry committees and boards, including the Long Service Leave Board and the MBA Training Council.

John was passionate about upskilling and helping others learn more about his industry. John’s extensive list of qualifications include:

> Carpentry and Joinery Certificate

> Clerk of Works Certificate

> Building Certificate

> Building Business Certificate

> Building Inspectors Certificate

> Building Licence Class ‘A’.

Master Builders ACT CEO, Michael Hopkins, thinking of John’s legacy in construction said, ‘It’s one thing to be skilled at your trade and it’s another to be able to share that talent with up-and-coming members of our industry. John was a man who was generous with his time and knowledge because he saw the value in community and the personal fulfilment that comes from investing in people.’

The skills and knowledge John earned and shared with others were incredible assets to the industry. John was truly passionate about industry training and providing opportunities for the next generation of builders. The current CEO of Manteena Group, Mark Bauer, and General Manager of Manteena Security, Andrew Kemp, both began as cadets under John’s leadership. It is no surprise that Manteena has grown from humble beginnings to the organisation that it is today through John’s vision and passion.

When thinking of John’s contribution to the construction industry the Greek proverb comes to mind, ‘A society grows great when old men plant trees in whose shade they know they shall never sit.’ The impact of John’s generosity, patience and ability to empower others to reach their full potential, will likely continue for many years to come. While John won’t be here to see the impact of his life’s work, the lessons we can take away from a true gentleman and family man like John, will endeavour.

TRAIN WITH ONE OF THE LEADING BUILDING AND CONSTRUCTION INDUSTRY ORGANISATIONS IN THE ACT

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> 11084NAT – Course in Asbestos Awareness

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Blackett Property Group

The Howarth Family’s Contribution to Canberra

In 1981, brothers, David and Stephen Howarth, along with Marilyn Howarth, founded Blackett Property Group. For 43 years the company has operated with the values of family, community, safety and high-quality at the forefront of all projects. In that time, Blackett Property Group has delivered over 2,500 residential and commercial projects for Canberrans and won over 50 major building awards.

The values driving their success have only been enriched by the involvement of David and Marilyn’s four children, Kim, Matt, Geoff and Adam. Matt and Geoff are Directors of Blackett Property Group, along with their partner Caine Barlin who heads up Blackett Commercial, which encompasses the residential and commercial arms of the business. Kim also works as a Project Manager in Blackett Homes. David and Marilyn’s youngest son Adam runs a property development company named HTI Group with Jon Tanchevski (whose family runs Classic Constructions).

In addition to the large-scale projects completed with their development business, Blackett Property Group encompasses Blackett Homes and Blackett Commercial. Blackett Homes specialises in bespoke residential homes, custom-designed houses and land packages and Blackett Commercial specialises in quality commercial fit-out projects across government, corporate, retail and hospitality sectors.

Although he has been an active member in both the commercial and residential sectors, many know David for his invaluable contributions to the residential construction industry sector. David served as the MBA Residential Sector Chair and on The MBA Executive Committee for many years, regularly advocating for safer practices in construction. One of David’s most rewarding achievements with the Master Builders Association (MBA) was visiting MBA Queensland for a National Housing Council Meeting where David was invited to the QLD MBA’s Building Awards evening along with fellow Member, Don Beaumont. They came back to Canberra and suggested MBA ACT have our own awards event, which ended up happening the very next year. Looking back at Blackett Property Group’s 40 years of MBA membership David says, ‘The MBA is a place where ideas are talked about and connections are made. Some of my long-term friends were made through the MBA.’

Much like their father, Matt and Geoff advocate for positive industry changes by attending the residential sector meetings. This is one of many valuable lessons that David and Marilyn have passed down to their children about creating a positive impact in the construction industry and the Canberra community in general. David named Blackett Property Group after the address of his childhood home at Blackett Street in Downer, and it’s a name his sons have kept to honour the family’s close connection to the region.

Another value the Howarth Family maintains in business is the importance of building and maintaining long-term relationships with local suppliers and subcontractors. To this day they have strong working relationships with suppliers and subcontractors, some of which span over 25 years. Blackett Property Group also highly values the great importance of having a dedicated team of staff, over the last 43 years they’ve trained and nurtured many young staff members who have become industry professionals. They are also proud to be part of the Canberra Community, including sponsoring their local rugby union team, the Gungahlin Eagles and many other charities and community organisations.

David’s valuable advocacy work and overall contribution to the Canberra construction industry has left big shoes for the next generation to fill, but there’s no doubt that Kim, Matt, Geoff and Adam are well and truly up to the challenge. With a new team of brothers at the helm of Blackett Property Group, it will be great to see what they will achieve over the next 40 years.

CPC40120 – Certificate IV in Building and Construction Training at MBA

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To find out more visit https://mba.org.au/training/cpc40110-certificateiv-in-building-and-construction-building-2/ or call (02) 6175 5900

MBA Group Training Limited | RTO No. 88163

‘This course has been extremely valuable and I am impressed with the delivery. The way it progressed through the units made sense and the assignments were just right. The best part about the course was having constant access to your knowledge and to be able to go in depth into any questions or topics. I really got a lot out of it and have recommended MBA to all my friends who want to do their Cert IV.’

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Certificate IV in Building and Construction student