Today’s quarterly construction work done disappointed economists enough to cause revisions to their GDP forecasts.

According to Bloomberg, of 17 economists that tipped this quarter’s rate, the closest was -2.5 per cent by Market Economics’ Stephen Koukoulas. Today’s figure came in at -3.8 per cent.

While engineering construction only fell by 1.1 per cent, building work (both residential and non-residential) fell by 5.1 per cent and 6.6 per cent respectively.

This comes despite inflation being at modest levels. Commonwealth Bank senior economist Kristina Clifton told clients the lower Australian dollar and capacity constraints (or at least talk of it) had hurt the markets.

She also noted that LNG construction, particularly in Western Australia, made up a significant proportion and supply was now meeting demand.

NAB’s Kaixin Owyong said the RBA would have been disappointed, having only forecast a 2 per cent fall.

“The result points to downside risk to the RBA’s implied Q2 GDP forecast of 0.8 per cent quarter on quarter,” she said. Yes the figure was that bad, the banks are revising their GDP forecasts.

How have small caps been affected?

While the majority of industries have gained in 2019, this has not been the case with real estate small caps. They are down 20 per cent in 12 months and 10 per cent in six months.

Code Name Price 1Y % Return 6M % Return Market Cap
AGJ AGRICULTURAL LAND TRUST 0.05 11 25 $4.9M
VLW VILLA WORLD LTD 2.345 14 22 $292.9M
HGL HUDSON INVESTMENT GROUP 0.51 34 21 $30.3M
APZ ASPEN GROUP 1.1 24 19 $106.2M
AVJ AVJENNINGS LTD 0.58 -14 17 $237.6M
AXI AXIOM PROPERTIES LTD 0.041 -7 17 $17.7M
AQR APN CONVENIENCE RETAIL REIT 3.35 29 15 $262.8M
TGP 360 CAPITAL GROUP LTD 1.12 18 12 $255.1M
GDF GARDA DIVERSIFIED PROP FUND 1.45 21 10 $237.0M
ERF ELANOR RETAIL PROPERTY FUND 1.29 6 10 $165.4M
SDG SUNLAND GROUP LTD 1.59 -6 9 $223.4M
DGH DESANE GROUP HOLDINGS LTD 1.435 35 8 $58.5M
FRI FINBAR GROUP LTD 0.89 -2 8 $239.5M
EGH EUREKA GROUP HOLDINGS LTD 0.275 -2 6 $63.6M
SSL SIETEL LTD 7.2 3 1 $57.7M
UUL ULTIMA UNITED LTD 0.025 -68 -4 $733.1M
QPR QUATTRO PLUS REAL ESTATE 0.95 -5 -5 $55.3M
MEA MCGRATH LTD 0.235 -34 -8 $39.5M
APW AIMS PROPERTY SECURITIES FUN 1.37 -16 -8 $61.5M
MPX MUSTERA PROPERTY GROUP LTD 0.29 -3 -9 $28.9M
BWR BLACKWALL PROPERTY TRUST 1.28 -2 -12 $190.0M
TIA TIAN AN AUSTRALIA LTD 0.465 -24 -17 $40.3M
KLO KINGSLAND GLOBAL LTD-CDI 0.076 -57 -20 $30.8M
LHB LIONHUB GROUP LTD 0.006 -88 -25 $5.0M
RPG RAPTIS GROUP LTD 0.047 -33 -33 $7.2M
URF US MASTERS RESIDENTIAL PROPERTY 0.775 -45 -33 $303.8M
VP7 VELOCITY PROPERTY GROUP LTD 0.033 -33 -38 $10.9M
DVN DEVINE LTD 0.135 -58 -39 $21.4M
LMW LANDMARK WHITE LTD 0.115 -73 -60 $14.5M
AU1 AGENCY GROUP AUSTRALIA LTD 0.064 -84 -63 $7.6M
CAQ CAQ HOLDINGS LTD 0.009 -76 -76 $6.5M
IBN IBUYNEW GROUP LTD 0.019 -94 -79 $414.1M

As for construction firms, the few listed are mostly large caps such as Boral (ASX:BLD) and Brickworks (ASX:BKW). These have also suffered, falling by 39 and 9 per cent respectively.

2019 begun amidst a housing slump when it seemed the only winners would be property developers. Also, it seemed Labor would win the election and their negative gearing restrictions (as well as the party’s more laissez-faire attitude toward militant construction unions) would apparently make things worse.

But when we went to the ballot box the opposite happened. This led to calls that the market for both newly constructed and established properties had the uptick it needed. Yet a few weeks afterwards, property owners didn’t seem to be suddenly buying or selling again.

Industry expects such as LJ Hooker head of research Mat Tiller told Stockhead previously buyers were saving themselves for the traditional spring selling season.

Stockhead has contacted him this afternoon for further comment.