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The cost of Greater Sydney’s two-week clampdown on construction could reach $2.5 billion for the quarter, according to new analysis.
Oxford Economics acknowledges the current pause on construction and cleaning services across Greater Sydney as “the harshest restrictions for construction seen in Australia”.
According to BS Oxford Economics’ principal economist, Timothy Hibbert, a provisional review pulls down the quarterly value of construction by 15 per cent for the third quarter of 2021 — or $2.5 billion — and that is with the assumption that the activity freeze ends as scheduled.
Approximately 280,000 construction sector workers are directly affected by the pause, with Mr Hibbert noting that there will be further indirect consequences for the transport, manufacturing and wholesale sectors.
According to Oxford Economics, “the pause on activity revises the near-term outlook for national GDP down modestly”.
The economist does expect the freeze to end as scheduled on 30 July, “to be replaced with targeted restrictions like those adopted in Melbourne, for a further four weeks”.
“Nonetheless, uncertainty is elevated, with an extension to the construction freeze a distinct possibility,” he said.
Acknowledging the fallout, Mr Hibbert said the impact will be transitory across Q4 2021 and Q1 2022.
He has noted Melbourne’s experience with lockdowns as highlighting “the construction sector’s resilience in being able to work with restrictions and recoup lost hours”.
But he did warn that bottlenecks and price inflations across key inputs may act to slow the catch-up, especially with recent pressure being placed on material and labour supplies.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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