A model of the dwelling construction industry in Australia and in each state

Abstract

The dwelling construction industry is an important sector of the economy because of its large size and its direct and indirect linkages with other sectors of the Australian economy. Directly the industry employs around one to one and a half percent of Australia’s total workforce and around half of the building construction workforce. In expenditure terms, real investment in dwellings accounts for between 3 and 5 per cent of total expenditure on gross fixed capital expenditure.Equally significant are the widespread linkages which the dwelling construction has with other sectors of the economy, from manufacturing activities ranging from clay bricks and cement to household durables, as well as with the public sector infrastructure such as roads, water and sewerage and telephone services. The industry also has direct linkages with bank and non-ban institutions operating in the Australian financial sector. Albon and Piggot (1982) estimated that the value of loams outstanding for housing mortgages represent around 20 percent of the value of all financial assets outstanding. One of the most notable features of the Australian dwelling construction sector is the considerable fluctuation and volatility in levels of activity. Given the direct and indirect linkages which the industry has with other sectors of the Australian economy, this ‘stop-go’ or ‘boom-bust’ syndrome means that aside from the direct impacts on industry employment and capacity utilization, there are modest but significant effects on a wide diversity of other industries. […]