Recent building approval figures indicate that the region’s economy will remain strong into the beginning of 2018, an Illawarra academic predicts.
Alex Frino, Professor of Economics at the University of Wollongong said building approvals data is a key indicator of the Illawarra's economic health.
He said this type of data is important because building approvals represent construction activity that has been approved for the future.
“It represents construction activity that will unfold in the future and is an important predictor of economic activity,” he said.
“The construction sector is one of the largest employers in the region, with some 8000 workers engaged directly in the sector in the region.”
As for how building approvals data been tracking over the past few years for the Illawarra, according to data supplied by the Australian Bureau of Statistics, building approvals have been trending up over the past few years.
In 2017, building approvals averaged about $250 million per quarter – or about 30 per cent higher than building approvals five years ago.
Prof Frino said the Illawarra’s September 2017 quarter building approvals came in at about $270 million, which is one of the highest levels of building approvals that has occurred in more than five years.
“All indications are that the last quarter for this year (2017) will also finish strongly – with the latest building approvals data we have for the quarter up 65 per cent relative to the same time last year (from $68.8 million to $113.9 million),” he said.
Prof Frino said these building approvals have been propelling the Illawarra economy, with unemployment trending down strongly over the past few years.
“In 2017, we had some of lowest unemployment figures reported in years.
“Much of the improvement in the local economy is driven by the construction sector.
“Based on the strength of recent building approvals data, I believe that the local economy will remain strong into the beginning of 2018.
“What happens next will very much depend on what happens to interest rates.”
Prof Frino said if interest rate rises occurred, it was likely to be towards the end of 2018 or early 2019.
Meanwhile, Prof Frino recently said it appears 2018 is going to be a great time to enter the housing market, “because it’s a soft market”.
“If prices come off a little, and the market’s soft, it’s probably the best time to get in. It’s a great time to be out looking to buy if you’re a first time home buyer and if you’re buying for a place to live in, rather than invest.”
He said the driver of the soft market is the Australian Prudential Regulation Authority introducing measures in the second quarter of 2017, aimed at curbing bank lending to investors.