An Avdiev Update – Where’s the good news?

Dear Colleague,

Bad news is click bait, the media loves it, and don’t we lap it up!

But in spite of all the gloom and doom, Australia continues on its lucky country path, even though our economic growth has slowed with the rest of the world.

Global influences look threatening.  Can one tweet from the American President change the world order?  A serious geo-political shift!  New power structures in the Middle East, Brexit is reaching the end game, the Hong Kong turmoil, the US / China trade war games continue, new trade agreements are slowly being signed.

There are winners and losers from the fallout.

The R Word

With all the focus on the bad news, are we talking ourselves into a recession?

Having dropped interest rates to several historic lows, the RBA expected the recent income tax cuts to stimulate spending, improve the business sentiment and start the money flowing through the economy.  Instead, it spooked the people.

Now the RBA is seeing our economy in a positive light, has put further interest rate falls on hold, the residential property market (low rise) has revived and prices are rising.  The cycle is back on its inevitable track.  Will the market overheat again?

Treasury is optimistic, unemployment is improving slowly, the Federal Government expects its budget to be in the black for the first time since 2009.  A boost to our global standing, borrowing capacity and ability to complete in the global market place.

There’s good news in property too.  Major listed companies with residential focus see an upturn in activity and product sales, local and foreign demand for commercial property, especially top quality CBD buildings, continues strongly. 

Where there’s action, there’s reward

The recent Avdiev Survey, conducted for the October Update to the Avdiev Property Industry Remuneration Report 2019 produced some positive news for property people, especially the young, smart talent, always a flight risk, who won in the pay stakes again.

Monitoring business conditions and remuneration changes in ten market sectors of the property industry produces some useful data for strategic planning and decision making.

Property pay is still ahead of the general workforce.  An average increase of 2.5% for seniors and mid level staff and 3% for the juniors, is better than the ABS figures rise of 2.3% and CPI at 1.6% to June 2019.

In responding to the Avdiev Survey, 63% of companies reported stable business conditions, 10% are doing better and 27%, mainly Design and Building Consultants, reported doing worse.

This sector reports a highly competitive market – severe cost cutting by rivals, fee underbidding, scope creep and late payments by clients all contribute to the despondency here.

Business conditions vary from state to state, between market sectors, and company specialisation.   Top issues for property companies are the work pipeline, market and economic conditions, regulations, investor lending and operations, staff and quality.  The Building Defects and Cladding crisis issue drew a lot of comment and proposed solutions – full service consultants fees, insurance, new or better enforcement of existing regulations, developer accountability and warranty, a national approach to dealing with common problems.

The Pay and the Benefits

Property pay rises are reflecting the fluctuating business conditions in the sectors.  The pay rise ranges indicate strong activity and a talent shortage – Real Estate Agency / Advisory – range 2 – 8%, Design and Building Consultants – especially those whose jobs are construction related – 1.9 – 10%, Building, Design and Construction – 2.5 – 15%.  IT professionals – 1.9 – 10%.

National infrastructure building projects to catch up with years of neglect and inaction have siphoned off professionals and trades and given hefty pay rises to the young.  What a benign combination and opportunity for wealth creation!  Historic low interest rates, banks being encouraged to lend, a good pay rise!  And then there’s the bank of mum and dad standing by to help the kids onto the property ladder.

Predictions for future remuneration increases are modest – an average of 2.5% for all staff levels and across all market sectors.  For an in depth look into property related remuneration and incentives, our annual Avdiev Property Industry Remuneration Report has salary data for over 360 positions with commentary on the state of the industry and its ongoing and ever fluid changes. We are wrapping up the data collection for the March 2020 Avdiev Report. If you haven’t already done so, please get your data back to us now so that it can be included in the next Report and you continue to receive your contributor benefits.
Reviews of remuneration structures carried out by the industry not only focus on current strategies but also on developing new non-remuneration policies – flexible hours, well-being and mental health programs, culture and training, available to all staff.

And the Women

Many efforts are made to encourage women to enter and stay in the property and construction industries, but there are many more obstacles and still a shortage.

The Victorian Government has announced a $500,000 Women in Construction Strategy funding boost to attract more women into the construction sector.  There are similar moves in NSW.

Those already engaged continue making progress.  The newly appointed NSW Government Architect is a woman.  So is Victoria’s Red Tape Commissioner monitoring the delays and duplications in the building and planning regime.

But more practical solutions are needed – here’s one.  A mid-tier builder, headed by a woman, has introduced some women friendly initiatives to help new mothers transition back to work in construction.

There is a Nursing Room at a hospital project they are building.  A quiet place to rest and recover, and give the next generation an early introduction to life on site.