Australia’s construction industry has generally experienced a robust expansion over the past two-and-a-half years. The main exception has been LNG construction, which has been in sharp decline following the completion of projects in Western Australia, Darwin and Central Queensland.
If we exclude oil & gas work, total construction work done in Australia has risen solidly over a three-year period, and will be around 20% higher in calendar 2019 (in real terms) than in 2016.
There have been four pillars of the upturn in construction over the past three years:
- An extraordinary residential building boom,
- A large upturn in non-residential building,
- A boom in renewable energy construction, and
- A wave of road and rail infrastructure projects.
Three of these four pillars of growth however will now turn down in succession. The residential building sector is already in sharp decline, non-residential building will be the next sector to turn down, and finally, renewable energy investment is expected to decline with the conclusion of the renewable energy target period in 2020. The last of the four pillars left standing will be road and rail infrastructure, which should continue to rise through to a peak in 2022/23 (see chart of major projects below).
Overall construction work done, excluding oil & gas, is forecast to peak in 2019 calendar year, and then fall to a trough in the cycle around 2023/24.