Activity in the non-residential sector has been rising strongly over the past few years, primarily in New South Wales and Victoria. The value of commencements and work done both declined in 2020/21, but we have seen another burst of project commencements during 2021/22, which should continue through 2022/23, and lead to one more burst of growth in work done during 2022/23.
The current increase in non-residential building is being partly driven by government spending in response to the pandemic, particularly in the health sector. But we are also seeing a rise in private sector investment, in warehouses, logistics buildings, wholesaling and retailing, in anticipation of a strong rebound in demand in the economy post-COVID. In 2022/23, we expect non-residential building work done to rise by a strong 26% (in real terms), from an already high level.
But activity cannot be sustained at this peak for long, particularly with rising interest rates and a slowing economy, and we expect a decline in activity, starting in 2023/24 financial year.