Building Activity, Australia methodology

This publication contains data relating to the construction of residential and non-residential buildings compiled from the quarterly Building Activity Survey. The Building Activity Survey is a national survey of builders, other organisations and individuals engaged in building activity. 

Building Activity statistics are used extensively by both public and private sector organisations to monitor economic activity, employment and investment and are a major contributor to the National Accounts.

The scope of the survey includes building activity relating to:

• construction of new buildings;
• alterations and additions to existing buildings;
• non-structural renovation and refurbishment work; and
• installation of integral building fixtures.

For the purposes of this collection, a building is 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 is the provision for regular access by persons in order to satisfy its intended use.

Construction activity not defined as building (e.g. roads, bridges, railways, earthworks, etc.) are excluded. Statistics for this activity can be found in Engineering Construction Activity, Australia.

The statistics were compiled using building approval details and returns collected from builders and other individuals and organisations engaged in building activity.  

As of the September quarter 2010, the survey has consisted of:

• an indirect, modelled component comprising residential building work with approval values from $10,000 to less than $50,000 and non-residential building work with approval values from $50,000 to less than $250,000. The contributions from these building jobs are modelled based on their building approval details.
• a direct collection of all identified building work having approval values of $5,000,000 or more.
• a sample survey, selected from other identified building work.

Building jobs included each quarter comprise selected jobs which have not been completed in the previous quarter and newly selected jobs from approved building jobs notified to the ABS Building Approvals, Australia collection during the 3 months up to, but not including, the last month of the reference quarter. 

The sample of building jobs on which data is collected each quarter is between 25,000 and 30,000 depending on the amount of building activity in the economy and the speed at which jobs are completed. The response rate is normally between 90-95% and data is imputed for non-responding units.

Since the September quarter of 1990, the quarterly estimates have represented all approved public and private sector owned:

• residential building jobs valued at $10,000 or more.
• non-residential building jobs valued at $50,000 or more.

For historical changes to the collection design see the Directory of Statistical Sources on the ABS website. 

Building activity is classified by Type of building (e.g. 'residential', 'non-residential') and by Type of work.

Type of building is the building's intended predominant function according to the ABS Functional Classification of Buildings 1999 (Revision 2021). 

• Except where specified in the Functional classification of buildings, 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. For example, in the case of a factory complex, 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.
• For a significant multi-function building which at the time of approval is intended to have more than one purpose (e.g. a hotel/shops/casino project), the ABS endeavours to split the approval details according to each main function. Where this is not possible because separate details cannot be obtained, the building is classified to the predominant function of the building.

Type of work consists of 'new' and 'alterations and additions'. 

The ownership of a building is classified as either private sector or public 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. 

The value of building work includes site preparation costs but excludes the value of land and landscaping. This may be an actual value (for completed work), or an anticipated value (for work yet to be completed). It is intended to be the final contract price or market value of the job when completed, or the best estimate of this quantity available. 

Statistics on the 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 2008 edition of the international statistical standard System of National Accounts (SNA08). 
SNA08 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.

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 SNA08 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. 

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. 

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. 

Seasonal adjustment is a means of removing the estimated effects of seasonal and calendar related variation from a series so that the effects of other influences can be more clearly recognised. It does not remove the effect of irregular or other influences (e.g. the approval of large projects or a change in the administrative arrangements of approving authorities).

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. (For example, the sum of the adjusted state series - for both work done and number of dwelling unit commencements - may not add to the adjusted Australian total). Therefore, figures should not be derived using the adjusted totals. 

Seasonally adjusted estimates are produced by a seasonal adjustment method which takes account of the latest available original estimates. A detailed review of seasonal factors is conducted annually, generally prior to the release of data for the December quarter. 

The ABS produces trend estimates to best represent the underlying behaviour in a series. Trend estimates are created by smoothing seasonally adjusted series to reduce the impact of the irregular component of the seasonally adjusted series. Abnormally high or low values (outliers) are discounted or excluded from the trend estimates.

Seasonally adjusted and trend estimates may be revised as new periods of data become available. Generally, revisions become smaller over time. Revisions to original data may also lead to revisions to seasonally adjusted and trend estimates.

As a general rule, caution should be exercised in using the seasonally adjusted series for dwelling unit commencements in Northern Territory and Australian Capital Territory. The small numbers and volatile nature of these data makes reliable estimation of the seasonal pattern very difficult. 

Further information on seasonally adjusted and trend estimates can be found in the ABS Information papers Time Series Analysis Frequently Asked Questions, 2003 (cat. no. 1346.0.55.002) and A Guide to Interpreting Time Series - Monitoring Trends, 2003 (cat. no. 1349.0).

Estimates in this publication are rounded which may result in discrepancies between the sums of component items and their totals. Percentage movements are calculated from data at the level of precision presented in this publication i.e. to the nearest integer for 'Number of dwellings' data, and to the nearest $1,000 for value data.

In some series there are discrepancies between the sums of component items (state/territory) and their totals (Australia). This affects data in some quarters from September 1974 to December 1984, where original unit record data is no longer available to correct the aggregation. Where a discrepancy occurs, the state/territory-level data will be more accurate.

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.

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’.

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. The reference year is updated annually in the September 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. Comparability with previous years is achieved by linking (or chaining) the series together to form a continuous time series.

Chain volume measures do not, in general, sum exactly to the total value of the components. Further information on the nature and concepts of chain volume measures is contained in Information Paper: Australian National Accounts, Introduction of Chain Volume and Price Indexes (cat. no. 5248.0).

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

Since the estimates for building activity (including alterations and additions) are based on 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 Data Cubes (see Downloads tab).

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 electronic table 33) and that the associated RSE is 1.5% (for actual percentage see the datacube for Relative standard errors; dwellings by sector, stage and type of construction, State and Australia). 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.

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.

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. Some non-sampling error is introduced by the estimation process for smaller jobs (see paragraph 3). The impact of this component of error has been estimated and included in the RSE measures presented in this publication. 

Revisions are made to the survey data as required as a result of new and updated information available from providers. Each issue includes revisions to the previous quarter, therefore data for the latest quarter should be considered to be preliminary only. 

The March Building Activity release each year may include revisions to periods prior to the previous quarter. A feature article has been included in the December 2015 Building Activity, Australia publication explaining potential sources of revisions in more detail. 

Statistics are released for the March, June, September and December quarters, approximately 14 weeks after the end of the reference period. 

Preliminary building work done estimates are available approximately nine weeks after the end of the reference period in Construction Work Done, Australia. 

The use of sample survey techniques in the Building Activity Survey means that reliable estimates of building activity are generally available only at state, territory and Australia levels. Although subject to higher relative standard errors, a range of sub-state estimates of building activity may be available. 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. 

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. 

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