Urbis has prepared a report for Master Builders Association of Victoria titled Victorian Building and Construction Industry Outlook, which indicates that while the national economy is recording only moderate growth, the Victorian economy and its construction industry continues to strengthen.

Housing activity across Victoria remains strong, with a recorded year-on-year growth of 9.7 per cent for FY2015/16. While there was a drop in housing starts in the first quarter of 2016, the spike in approvals suggests starts will improve again the second half of the year.

The total number of units and apartments approved bounced back in the June 2016 quarter after dropping in March, although commencements of units and apartments appear to be levelling off.

The value of non-residential work in Victoria declined slightly in the March 2016 quarter, but was stronger than a year earlier and still well above the five-year average.

Engineering construction for the whole of Australia continued to fall in the June quarter of 2016, dropping by 9.0 per cent on a quarterly basis, 24.9 per cent year-on-year and the forecast outlook is subdued. The figure for Victoria’s engineering construction work done is much stronger, with a year-on-year growth of around 8.5 per cent in the year ending June 2016.

Population growth in Australia has slowed down in general since its recent peak in 2012, however Victoria still sees relatively robust population growth and remains attractive to newcomers. In 2015, approximately 109,800 people joined the Victorian population, which is the strongest growth across all states since 2010.

Full time employment growth in Victoria has been exceptionally strong compared to the rest of the country, which is positive for housing.

Despite the seemingly robust GDP growth at the start of the year, national consumer confidence portrays a mixed picture, suggested by the high fluctuation over the past year. For most of the last 12 months, confidence has remained below the 10 year average.

Housing affordability in Victoria has been improving since its worst point in December 2015, with the affordability indicator for residential properties being 4.4 index points higher compared to six months earlier.

The full report can be found here.