Australia's crane index suggests construction is still booming in the capital cities -- for now

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Australia’s construction industry has been one of the pillars on which the nation’s economic transition has been built since the end of the mining boom.

So, even though the latest AI Group-HIA performance of construction index (PCI) suggested Australia’s construction industry is in a spot of bother there are still signs of strength according to the latest release of the Rider Levett Bucknall (RLB) Crane Index, for Q2 2016.

The index, which tracks the numbers of cranes in the key mainland cities within Australia, has risen by 145% since the commencement of the Crane Index in Q4 2013. The index also showed all Australian cities since the last count have recorded increased or neutral crane activity.

Supplied

RLB said that there are currently 647 cranes across the cities they survey with significant growth in Sydney, Canberra, Gold Coast and Melbourne. To put the number of cranes into context, the second quarter’s 647 is an increase of 113 cranes or around 20% since the last index was calculated.

“80% of all cranes counted in the previous Crane Index were removed and erected on other sites around Australia,” demonstrating “strong levels of activity over the short term,” RLB said.

Australian construction is still dominated by the residential sector, which accounts for 81% of all cranes recorded. That’s 525 cranes.

“Since RLB’s last Crane Index, some 264 cranes were removed from residential projects around the country, and 368 erected. This again highlights the current strength of the multi-storey residential sector,” the company said.

With so many net cranes being added so late in the residential construction cycle, we could be seeing the real world version of what Luci Ellis’, the RBA’s head of its Finanical Stability Department, calls the Slower Builder Theory of property development.

That theory, Ellis says, is based on the notion that “everyone knows that not all the projects underway will make money, but yours will if you can just complete it before the other guys complete theirs”.

We’ll know in the next 12 months.

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