Building industry recovery to be slow, says BIS Shrapnel report Recovery in the construction industry is expected to be "uncomfortably slow." The Queensland building sector is showing signs of new life, according a new market report. But the road to recovery will be long and hard, with the chance of interest rate rises likely to dampen an already hesitant market for new dwellings. According to the Building in Australia 2013 report from economics forecasting firm BIS Shrapnel, the upswing in building activity needed to offset the post-mining-boom lull will gather momentum over the next two years. Value of housing loans approved monthly in Queensland. And while Brisbane will lead the regions as an epicentre of growth, BIS associate director Kim Hawtrey said the pace will be "uncomfortably slow." "We're in for a real nail-biter," Dr Hawtrey said. Home building has been punching below its weight and normally low mortgage rates would be stimulating the sector toward clear recovery by now. Total dwellings approved in Queensland. But the antibiotics are taking longer to work this time around. High household debt, concerns about the global economy, planning restrictions and a lack of land supply were among the factors behind the new phenomenon, Dr Hawtrey said. However, demographic changes were also at play, with population growth not necessarily translating into demand for new housing. "Baby boomers, once the drivers of home construction, are now putting a brake on building as their numbers outweigh younger generations," he said. For their part, young people are discouraged by affordability barriers and changes to first home buyer grants. According to the report, Brisbane can expect growth between 15-17 per cent in other dwelling commencements over the next two years, while improvements in detached house building lag slightly behind at 12-15 per cent. There is a peak in demand at 39,000 dwelling commencements projected for the 2016-17 financial year, followed by a moderate decline at 9 per cent in the following year largely due to rising interest rates. The report finds other dwelling activity will fall off particularly sharply at 19 per cent in 2017-18, whilst detached housing will hold up comparatively well supported by activity across regional Queensland. But despite the strong increase in activity, the report finds completions will only just match underlying demand in 2016-17, and that new additions to dwelling supply will not have been sufficient to eat into the existing deficiency. According to BIS Shrapnel, Queensland's housing gap will reach 63,500 by June 2015 and then continue to expand from 2018 onwards, with residential building forecast to return to the stronger levels achieved before the GFC over the longer term. From 2019 to 2023, Queensland will see annual dwelling commencements average 43,300, then 44,950 from 2024 to 2028. Although at current household formation rates this will still be insufficient to satisfy the current undersupply, the report finds.