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PESSIMISM about the Queensland economy and the construction sector is rising, but the Gold Coast and Sunshine Coast are the two markets bucking the trend, according to Master Builders.
The latest Survey of Industry Conditions compiled by the construction sector's peak body also shows concerns are emerging that the Brisbane market may have peaked.
"Business confidence in the Queensland economy and building industry hit a wall in the March quarter and dropped into negative territory for the first time in more than three years," says the report.
It has found that while almost half of respondents are banking on stable conditions ahead, more are taking a pessimistic view.
"Nearly one-in-three respondents expect the economic outlook to deteriorate going forward," says the report. "This is in line with recent building approvals which have moved off the peak."
The Master Builders findings come on the heels of positive results in the latest Westpac Melbourne Institute Index of Consumer Sentiment, which jumped by 8.5 per cent in May.
The Westpac index was buoyed by the latest official interest rate cut announced last week by the Reserve Bank of Australia.
However, the Master Builders findings reflect concerns by CoreLogic research analysts Tim Lawless and Cameron Kusher that Brisbane and Melbourne in particular face a shortfall in buyers to settle on the volume of apartments coming to the market in the next 24 months.
Despite the emerging negativity in Queensland, Master Builders has found respondents on the Gold Coast and Sunshine Coast are the most confident of any region, with the report revealing that they 'now stand alone in maintaining a strong performance'.
The Gold Coast leads the state with 61.6 per cent of respondents confident, followed by the Sunshine Coast at 53.6 per cent.
The only other region where confidence outweighs pessimism is Far North Queensland at 52.2 per cent. In Brisbane, just 46.4 per cent of respondents remain confident.
Master Builders deputy executive director Paul Bidwell says while pessimism is on the increase, he is encouraged that most respondents expect a stable outlook for the year ahead.
"Low levels of demand are the most critical constraint on business growth," says Bidwell.
"This is in line with falls in building approvals over the same period and the concentrated nature of the demand which has failed to reach many regions and sectors of the industry."
Bidwell says builders will be scrutinising the Queensland Budget next month for a potential boost to construction through infrastructure initiatives or improved housing affordability measures.
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