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8752.0 - Building Activity, Australia, Sep 2003  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 19/01/2004   
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INTRODUCTION

1. This publication contains detailed estimates from the quarterly Building Activity Survey. Each issue includes revisions to the previous quarter. Therefore data for the latest quarter should be considered to be preliminary only.

2. The statistics were compiled on the basis of returns collected from builders and other individuals and organisations engaged in building activity. From the March quarter 2002, the quarterly survey consists of:

  • a sample survey of private sector jobs involving residential building jobs valued at $10,000 or more and non-residential building jobs valued at $50,000 or more
  • a complete enumeration of all such public sector building jobs.

3. From the September quarter 1990, only non-residential building jobs (both new and alterations and additions) with an approval value of $50,000 (previously $30,000) or more are included in the survey.

4. The use of sample survey techniques in the Building Activity Survey means that reliable estimates of private sector building activity are generally available only at state, territory and Australia levels. Although subject to higher relative standard errors (refer to paragraphs 25-28), a range of sub-state estimates of building activity may be available. Reliable small area data are available for the Northern Territory, which has been completely enumerated since the June quarter 1991. For further information on the availability of Building Activity estimates, contact the ABS in Adelaide on 08 8237 7316. Detailed data on Building Approvals, based on information reported by local government and other reporting authorities, are available for regions below state and territory level from the Building Approval series compiled by the ABS.


SCOPE AND COVERAGE

5. The statistics relate to building activity which includes construction of new buildings and alterations and additions to existing buildings. Construction activity not defined as building (e.g. construction of roads, bridges, railways, earthworks, etc.) is compiled from the ABS Engineering Construction Survey (ECS). Results from the Building Activity Survey, together with estimates from the ECS, provide a complete quarterly picture of building and construction.

6. Building jobs included in each quarter in the Building Activity Survey comprise those jobs selected in previous quarters which have not been completed (or commenced) by the end of the previous quarter and those jobs newly selected in the current quarter. The population list from which jobs are selected for inclusion comprises all approved building jobs which were notified to the ABS (refer paragraph 2) up to but not including the last month of the reference quarter (i.e. up to the end of August in respect of the September quarter survey). This introduces a lag to the statistics in respect of those jobs notified and commenced in the last month of the reference quarter (i.e. for the month of September in respect of the September quarter survey). For example, jobs which were notified as approved in the month of June and which actually commenced in that month are shown as commencements in the September quarter. Similarly, building jobs which were notified in the month of September and which actually commenced in that month are shown as commencements in the December quarter.

7. From the September quarter 2002, building activity in the External Territories of Australia is included in these statistics. Jervis Bay is included in New South Wales, while Christmas Island and Cocos-Keeling Islands are included in Western Australia.


TREATMENT OF GST

8. Statistics on value of building work (current prices) show residential building on a GST inclusive basis and non-residential building on a GST exclusive basis. This approach is consistent with that adopted in the Australian National Accounts which is based on the conceptual framework described in the 1993 edition of the international statistical standard System of National Accounts (SNA93).

9. SNA93 requires value added taxes (VAT), such as the GST, to be recorded on a net basis where:
      (a) both outputs of goods and services and imports are valued excluding invoiced VAT
      (b) purchases of goods and services are recorded including non-deductible VAT.

10. Under the net system, VAT is recorded as being payable by purchasers, not sellers, and then only by those purchasers who are not able to deduct it. Almost all VAT is therefore recorded in the SNA93 as being paid on final uses-mainly on household consumption. Small amounts of VAT, may however, be paid by businesses in respect of certain kinds of purchases on which VAT may not be deductible.

11. Within building activity statistics, purchasers of residential structures are unable to deduct GST from the purchase price. For non-residential structures, the reverse is true. While the ABS collects all building activity data on a GST inclusive basis, it publishes value data inclusive of GST in respect of residential construction and exclusive of GST in respect of non-residential construction.

12. It is appropriate to add the residential and non-residential components to derive total building activity. Valuation of the components of the total is consistent, since, for both components, the value data is recorded inclusive of non-deductible GST paid by the purchaser. As such, total building activity includes the non-deductible GST payable on residential building.


DEFINITIONS

13. A building is defined as a rigid, fixed and permanent structure which has a roof. Its intended purpose is primarily to house people, plant, machinery, vehicles, goods or livestock. An integral feature of a building’s design, to satisfy its intended use, is the provision for regular access by persons.

14. A dwelling unit is defined as a self-contained suite of rooms, including cooking and bathing facilities and intended for long-term residential use. Units (whether self-contained or not) within buildings offering institutional care, such as hospitals, or temporary accommodation such as motels, hostels and holiday apartments, are not defined as dwelling units. The value of units of this type is included in the appropriate category of non-residential building.

15. A residential building is defined as a building predominantly consisting of one or more dwelling units. Residential buildings can be either houses or other residential buildings:
  • A house is defined as a detached building predominantly used for long-term residential purposes and consisting of only one dwelling unit. Thus, detached ‘granny flats’ and detached dwelling units (such as caretakers’ residences) associated with non-residential buildings are defined as houses for the purpose of these statistics.
  • An other residential building is defined as a building which is predominantly used for long-term residential purposes and which contains (or has attached to it) more than one dwelling unit (e.g. includes townhouses, duplexes, apartment buildings, etc.).

16. The number of dwelling units created as part of alterations and additions to, or conversions of, existing residential or non-residential buildings and as part of the construction of non-residential building is shown separately (see tables 21 and 23) under the heading of ‘Conversions, etc.’, and is included in the total number of dwelling units shown in these tables.

17. In addition, the seasonally adjusted and trend estimates and percentage changes for the total number of dwelling units commenced and completed, shown in tables 18-20 and 22, include these conversions, etc.

18. Commenced. A building is defined as commenced when the first physical building activity has been performed on site in the form of materials fixed in place and/or labour expended (this includes site preparation but excludes delivery of building materials, the drawing of plans and specifications and the construction of non-building infrastructures, such as roads).

19. Under construction. A building is regarded as being under construction at the end of a period if it has been commenced but has not been completed, and work on it has not been abandoned.

20. Completed. A building is defined as completed when building activity has progressed to the stage where the building can fulfil its intended function. In practice, the ABS regards buildings as completed when notified as such by respondents to the survey.


VALUATION OF BUILDING JOBS

21. The value series in this publication are derived from estimates reported on survey returns as follows:
  • Value of building commenced or under construction represents the anticipated completion value based, where practicable, on estimated market or contract price of building jobs excluding the value of land and landscaping. Site preparation costs are included. Where jobs proceed over several quarters the anticipated completion value reported on the return for the first (commencement) quarter may be amended on returns for subsequent (under construction) quarters as the job nears completion.
  • Value of building completed represents the actual completion value based, where practicable, on the market or contract price of jobs including site preparation costs but excluding the value of land and landscaping.
  • Value of building work done during the period represents the estimated value of building work actually carried out during the quarter on jobs which have commenced.
  • Value of building work yet to be done represents the difference between the anticipated completion value and the estimated value of work done on jobs up to the end of the period.


BUILDING CLASSIFICATION

22. Ownership. The ownership of a building is classified as either public sector or private sector, according to the sector of the intended owner of the completed building as evident at the time of approval. Residential buildings being constructed by private sector builders under government housing authority schemes whereby the authority has contracted, or intends to contract, to purchase the buildings on or before completion, are classified as public sector.

23. Functional classification of buildings. A building is classified according to its intended major function. Hence a building which is ancillary to other buildings, or forms a part of a group of related buildings, is classified to the function of the building and not to the function of the group as a whole. An example of this can be seen in the treatment of building work approved for a factory complex. In this case, a detached administration building would be classified to Offices, a detached cafeteria building to Retail/wholesale trade, while factory buildings would be classified to Factories. An exception to this rule is the treatment of group accommodation buildings where, for example, a student accommodation building on a university campus would be classified to Educational.

24. Examples of the types of individual building jobs included under each main functional heading are shown in the following lists:
  • Houses. Includes ‘cottages’, ‘bungalows’, detached caretakers’/managers’ cottages, rectories.
  • Other residential buildings. Includes blocks of flats, home units, attached townhouses, villa units, terrace houses, semi-detached houses, maisonettes.
  • Accommodation. Buildings primarily providing short-term or temporary accommodation, and includes the following categories:
      • Self contained, short term apartments (e.g. serviced apartments)
      • Hotels (predominantly accommodation), motels, boarding houses, cabins
      • Other short term accommodation n.e.c. (e.g. migrant hostels, youth hostels, lodges)
  • Aged care facilities. Building used in the provision or support of aged care facilities, excluding dwellings (e.g. retirement villages). Includes aged care facilities with and without medical care.
  • Agriculture/aquaculture. Buildings housing, or associated with, agriculture and aquaculture activities, including bulk storage of produce (e.g. shearing shed, grain silo, shearers’ quarters).
  • Commercial. Buildings primarily occupied with or engaged in commercial trade or work intended for commercial trade, including buildings used primarily in wholesale and retail trades, office and transport activites.
  • Educational. Buildings used in the provision or support of educational services, including group accommodation buildings (e.g. classrooms, school canteens, dormitories).
  • Entertainment and recreation. Buildings used in the provision of entertainment and recreational facilities or services (e.g. libraries, museums, casinos, sporting facilities).
  • Factories. Buildings housing, or associated with, production and assembly processes of intermediate and final goods.
  • Health. Buildings used in the provision of non-aged care medical services (e.g. nurses quarters, laboratories, clinics).
  • Industrial. Buildings used for warehousing and the production and assembly activities of industrial establishments, including factories and plants.
  • Offices. Buildings primarily used in the provision of professional services or public administration (e.g. offices, insurance or finance buildings).
  • Religious. Buildings used for or associated with worship, or in support of programs sponsored by religious bodies (e.g. church, temple, church hall, dormitories).
  • Retail/wholesale trade. Buildings primarily used in the sale of goods to intermediate and end users.
  • Transport. Buildings primarily used in the provision of transport services, and includes the following categories:
      • Passenger transport buildings (e.g. passenger terminals)
      • Non-passenger transport buildings (e.g. freight terminals)
      • Commercial carparks (excluded are those built as part of, and intended to service, other distinct building developments)
      • Other transport buildings n.e.c.
  • Warehouses. Buildings primarily used for storage of goods, excluding produce storage.


RELIABILITY OF THE ESTIMATES

25. Since the figures for private sector building activity (including alterations and additions) are derived from information obtained from a sample of approved building jobs, they are subject to sampling error; that is, they may differ from the figures that would have been obtained if information for all approved jobs for the relevant period had been included in the survey. One measure of the likely difference is given by the standard error (SE), which indicates the extent to which an estimate might have varied by chance because only a sample of approved jobs was included. There are about two chances in three that a sample estimate will differ by less than one SE from the figure that would have been obtained if all approved jobs had been included, and about nineteen chances in twenty that the difference will be less than two SEs. Another measure of sampling variability is the relative standard error (RSE), which is obtained by expressing the SE as a percentage of the estimate to which it refers. The RSEs of estimates provide an indication of the percentage errors likely to have occurred due to sampling, and are shown in tables 36 and 37.

26. An example of the use of RSEs is as follows. Assume that the estimate of the number of new private sector houses commenced during the latest quarter is 30,000 (for actual estimate see table 18) and that the associated RSE is 1.5% (for actual percentage see table 36). There would then be about two chances in three that the number which would have been obtained if information had been collected about all approved private sector house jobs would have been within the range 29,550 to 30,450 (1.5% of 30,000 is 450) and about nineteen chances in twenty that the number would have been within the range 29,100 to 30,900.

27. Estimates that have an estimated relative standard error between 10% and 25% are annotated with the symbol ‘^’. These estimates should be used with caution as they are subject to sampling variability too high for some purposes. Estimates with an RSE between 25% and 50% are annotated with the symbol ‘*’ indicating that the estimate should be used with caution as it is subject to sampling variability too high for most practical purposes. Estimates with an RSE greater than 50% are annotated with the symbol ‘**’ indicating that the sampling variability causes the estimates to be considered too unreliable for general use.

28. The imprecision due to sampling variability, which is measured by the RSE, should not be confused with inaccuracies that may occur because of inadequacies in the source of building approval information, imperfections in reporting by respondents, and errors made in the coding and processing of data. Inaccuracies of this kind are referred to as non-sampling error, and may occur in any enumeration whether it be a full count or only a sample. Every effort is made to reduce the non-sampling error to a minimum by the careful design of questionnaires, efforts to obtain responses for all selected jobs, and efficient operating procedures.


SEASONAL ADJUSTMENT

29. Seasonally adjusted building statistics are shown in tables 1-10, 13-20 and 22. In the seasonally adjusted series, account has been taken of normal seasonal factors, ‘trading day’ effects arising from the varying numbers of working days in a quarter and the effect of movement in the date of Easter which may, in successive years, affect figures for different quarters.

30. Since seasonally adjusted statistics reflect both irregular and trend movements, an upward or downward movement in a seasonally adjusted series does not necessarily indicate a change of trend. Particular care should therefore be taken in interpreting individual quarter-to-quarter movements. Some of the component series shown have been seasonally adjusted independently. As a consequence, while the unadjusted components in the original series shown add to the totals, the adjusted components may not add to the adjusted totals. Therefore, figures should not be derived using the adjusted totals. (For example, seasonally adjusted public sector dwelling units should not be derived by subtracting seasonally adjusted private sector dwelling units from the seasonally adjusted total).

31. From the June quarter 2003, the seasonally adjusted estimates are produced by the concurrent seasonal adjustment method which takes account of the latest available original estimates. The concurrent seasonal adjustment methodology replaces the forward factor methodology previously used, when seasonal factors were only revised following an annual re-analysis. The concurrent method improves the estimation of seasonal factors and, therefore, the seasonally adjusted and trend estimates for the current and previous quarters. As a result of this improvement, revisions to the seasonally adjusted and trend estimates will be observed for recent periods. In most instances, the only noticeable revisions will be to the previous quarter and the same quarter of a year earlier.

32. A more detailed review of concurrent seasonal factors will be conducted annually, generally prior to the release of data for the December quarter.


TREND ESTIMATES

33. Seasonally adjusted series can be smoothed to reduce the impact of the irregular component in the adjusted series. This smoothed seasonally adjusted series is called a trend estimate.

34. The trend estimates are derived by applying a 7-term Henderson moving average to the seasonally adjusted series. The 7-term Henderson average (like all Henderson averages) is symmetric but, as the end of a time series is approached, asymmetric forms of the average are applied. Unlike weights of the standard 7-term Henderson moving average, the weights employed here have been tailored to suit the particular characteristics of individual series.

35. While the smoothing technique described in paragraphs 33 and 34 enables trend estimates to be produced for recent quarters, it does result in revisions to the estimates for the most recent three quarters as additional observations become available. There may also be revisions because of changes in the original data. For further information, see Information Paper: A Guide to Interpreting Time Series-Monitoring Trends: an Overview (cat. no. 1348.0) or contact the Assistant Director, Time Series Analysis on Canberra 02 6252 6540 or email .


CHAIN VOLUME MEASURES

36. Chain volume estimates of the value of commencements and work done are presented in original, seasonally adjusted and trend terms for Australia and for each state and territory.

37. While current price estimates of the value of commencements and work done reflect both price and volume changes, chain volume estimates measure changes in value after the direct effects of price changes have been eliminated and therefore only reflect volume changes. The direct impact of the GST is a price change, and hence is removed from chain volume estimates. The deflators used to revalue the current price estimates in this publication are derived from the same price data underlying the deflators compiled for the dwellings and new other building components of the national accounts aggregate ‘Gross fixed capital formation’.

38. The chain volume measures of commencements and work done appearing in this publication are annually reweighted chain Laspeyres indexes referenced to current price values in a chosen reference year (currently 2001-02). The reference year is updated annually in the June quarter publication. Each year’s data in the value of commencements and work done series are based on the prices of the previous year, except for the quarters of the latest incomplete year which are based upon the current reference year (i.e. 2001-02). Comparability with previous years is achieved by linking (or chaining) the series together to form a continuous time series. Further information on the nature and concepts of chain volume measures is contained in the ABS Information Paper: Introduction of Chain Volume Measures in the Australian National Accounts (cat. no. 5248.0).

39. The factors used to seasonally adjust the chain volume series are identical to those used to adjust the corresponding current price series.


ACKNOWLEDGMENT

40. ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.


RELATED PRODUCTS

41. Users may also wish to refer to the following publications which are available from ABS Bookshops:
      Dwelling Unit Commencements, Australia, Preliminary, cat. no. 8750.0, quarterly
      Construction Work Done, Australia, Preliminary, cat. no. 8755.0, quarterly
      Building Approvals, Australia, cat. no. 8731.0, monthly
      Engineering Construction Activity, Australia, cat. no. 8762.0, quarterly
      House Price Indexes: Eight Capital Cities, cat. no. 6416.0, quarterly
      Housing Finance for Owner Occupation, Australia, cat. no. 5609.0, monthly
      Producer Price Indexes, Australia, cat. no. 6427.0, quarterly
      Private Sector Construction Industry, Australia, 1996-97, cat. no. 8772.0.

42. Current publications and other products released by the ABS are listed in the Catalogue of Publications and Products (cat. no. 1101.0). The Catalogue is available from any ABS office or the ABS web site . The ABS also issues a daily Release Advice on the web site which details products to be released in the week ahead.


ABS DATA AVAILABLE ON REQUEST

43. As well as the statistics included in this and related publications, the ABS may have other relevant data available on request. Inquiries should be made to the National Information and Referral Service on 1300 135 070.


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