Federal government support has helped HVAC contractors survive the global pandemic but what happens when the JobKeeper program ends later this month on 28 March, 2021?
The JobKeeper wage subsidy ends at a time when the banks are withdrawing mortgage support to its customers and the Housing Industry Association (HIA) has warned construction opportunities will be severely limited in 2021.
Until now the construction market has remained surprisingly strong which is good news for the commercial air conditioning market.
According to the Australian Industry Group/HIA Construction Index activity improved by a further 2.3 points to 57.6 in December 2020 and January 2021, indicating four consecutive months of positive conditions and the strongest result since July 2017.
Ai Group head of policy, Peter Burn, said house building remained strong and the pace of improvement accelerated among commercial builders.
He said engineering construction maintained a gentler expansion and apartment building, which has lagged for some time, continued to do so although the pace of decline was arrested.
“Across the construction sector, activity, employment and new orders all lifted on November levels,” Burn said.
“The strong rise in new orders is particularly encouraging and points to the likelihood that coming months will see the recovery continue.
“Notwithstanding the good news interest rates are set to remain low for several years and with immigration on hold there will be limited opportunity for residential construction, and particularly the apartment sector over the course of 2021.”
HIA economist, Angela Lillicrap said there is a divergence between the conditions facing detached house builders and the conditions facing apartment builders.
She said the index tracking apartment construction continues to indicate the market is contracting, albeit at a slower pace.
“The apartment market is likely to be constrained going into 2021 due to slower population growth and a stronger preference for detached houses,” Lillicrap said.
HVAC contractors have also been impacted by the changing urban landscape in capital cities with office occupancy rates at record lows.
Office occupancy levels in the Melbourne and Sydney CBDs were at 7 per cent and 40 per cent of pre-Covid levels respectively in October 2020, according to data from the Property Council of Australia.
Assuming less future demand for commercial and retail property in city centres, vacancy rates could rise further for these spaces, despite some business’ efforts to bring workers back to the office at some capacity.