New Building Permits Drop To Slowest Pace In A Decade

This American article from May 2007 reports that new building permits in the US dropped to the slowest pace since 1997. Reasons for the decline include a general downward correction of the market, and more specifically tightening mortgage lending standards and an excess of vacant housing units on the market.

The condition of the market is putting increased pressure on builders in the US, who are increasing their attempt to make sales and limit cancellations. The article further discusses which type of residential buildings are declining more than others.

While this article relates to the US residential industry, which is obviously significantly more developed than that of Australia, it is interesting to understand the world wide conditions, and to consider what impact this will have on supplier and provider contracts in Australia now that we live in a global environment.

Construction weakens, despite lift in house building: Australian PCI

This article reports weak growth in the Australian commercial and apartment building activity in April 2007, which has outweighed the slight improvement in the house building sector. The article further indicates that new orders have decreased and builders have resorted to discounting of house prices to boost sales. The article indicates that the weak month has already resulted in a decline in employment and reduction in supplier deliveries, and that the trend may extend to future months as a result of the reduced orders.

The article draws a distinction between commercial construction which has declined, and the residential construction market which has shown growth and an increased level of demand.

The article demonstrates the immediate impact of consumer and commercial demand for construction on the industry and further shows how responsive the industry is to the market and the actions or demands of outsiders generally.
http://www.azobuild.com/news.asp?newsID=3661