The Housing Industry Association’s (HIA) Trades Report for the December 2012 quarter has painted a gloomy picture of the residential construction sector.

The quarterly survey of builders and sub-contractors also found a surplus of skilled labour in the building sector in the final quarter of 2012.

“These figures confirm that the skilled trades have endured a most challenging 2012. For the first time in the index’s history, a surplus of skilled labour was recorded in every quarter of the past year,” said HIA Senior Economist, Shane Garrett.

“The weak skills market conditions put at risk the longer term productive capacity of the housing construction industry. This is because current market conditions may deter entry to the industry and halt the accumulation of skills and training. It is vital that improved support for training and upskilling is provided in these difficult circumstances,” Mr Garrett added.

The HIA Trade Availability Index registered +0.22 in the December 2012 quarter, meaning that trades were in moderate oversupply (readings greater than 0.0 indicate oversupply). This had the effect of muting price developments. The HIA Trade Prices Index slipped 0.6 per cent in the December 2012 quarter, equivalent to a reduction of 0.2 per cent when compared to the same quarter in 2011.

HIA Executive Director, Industry Workforce Development, Liz Greenwood added: “A key reason why there’s a surplus of trades is because no-one wants to spend money on residential construction, including the banks. This lull in activity is hurting our apprentice commencements – no-one can commit to taking on an apprentice because there simply isn’t enough work to justify that level of financial commitment. Now more than ever, the government needs to focus on making sure employer incentives will keep up the flow of skilled labour into the only industry that can build a roof over our heads.”