Australia’s Housing Industry Association has published statistics on housing construction that show the population of Melbourne grew by 125,424 in 2017, the largest annual increase of any city in Australia’s history. If this rate of growth continues, the Victorian capital is on course to overtake Sydney as the country’s commercial and cultural capital by 2030.
Melbourne’s rapid growth, bolstered by its reputation as a cultural hub, is creating a construction boom, with one in 10 workers in the state employed in the industry, the highest total since the early eighties.
In the second quarter of 2018, construction accounted for 331,000 jobs, up 18% year-on-year and 33% higher than the average over the past 10 years, according to the report.
On the state level, Victoria has overtaken New South Wales as the locus of greatest housing construction activity and home loan approvals over the first six months of 2018.
The report adds that the state’s dependence on construction employment may be a vulnerability. If the regional economy falters, capital investment in new building is usually the first casualty.
The report says: "If it turns out that the pro-cyclical nature of construction investment has disproportionately fuelled the state’s economic growth at the expense of other sectors, then the state could be left exposed in the event of slowing construction activity."
However, this may be offset by a number of large infrastructure schemes, most notably the US$37bn Suburban Rail Loop and the $11bn Supertrain (see Further reading, below).
Image: The site of Melbourne’s contemporary art gallery (Victoria State)
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