Australian Construction Outlook – Non-Residential Building

/in /by

Non-residential building activity has been booming across Australia in recent years, driven in particular by the office, education, warehouse, and short-term accommodation sectors. Looking ahead, however, we expect things to start moving downhill, with a substantial contraction forecast for the next four years.

While a downturn was anticipated prior to the outbreak of COVID-19, the pandemic has had its influence on the outlook by exacerbating weaknesses in some areas, but also by inspiring governments to fast-track approvals and spend more on building works themselves. This means that while private sector work done is forecast to decline in the near term, it will be offset to some extent by a temporary boost in public sector funded works.

All said, the sectors responsible for much of the downturn over the next few years will be the same sectors that led during the boom. This includes activity associated with education buildings, but the decline in this sector is not expected to really begin until the 2022/23 financial year. Meanwhile, the major growth sectors helping to support activity in the short term are health, transport, and non-residential buildings not elsewhere classified (e.g., prisons, military bases, etc.).

Visit Report Page

Australian Construction Outlook – Overview

/in /by

The outlook for building and construction activity has now come full circle, to a point where the total value of construction work over 2020, and the next few years, is expected to be very similar to what we expected it to be back in January 2020, before all the disruption of the COIVD pandemic.

In the near term, the Homebuilder scheme, along with other incentives in the various states, has provided a temporary lift to detached house building. And over the next few years, we will also see the positive effects of a major phase of fiscal stimulus spending, centred around public infrastructure construction.

On the negative side, private sector investment in non-residential buildings is still running much lower than pre-COVID expectations. And resources sector investment has also been negatively impacted by the pandemic.

This report provides a concise explanation of the outlook for the various segments of building and construction. It provides a fully revised set of forecasts for all segments of building and construction looking ahead ten years.

Visit Report Page

Australian Regional Construction Outlook

/in /by

The metropolitan areas of Sydney and Melbourne plateaued in 2018/19 and we are expecting downturns in both regions over the next couple of years driven by the falling residential sector. However, we expect that both downturns will be softened by booming commercial building sectors and a number of large urban transport infrastructure projects (road and rail) in each city.

The Brisbane market was previously expected to be entering an upturn, but is now forecasted to fall the next couple of years. This is largely due to more dramatic declines in residential than previously expected.

Perth has declined over the past few years, mainly due to a big drop in residential building and a weak economy (related to the mining downturn). Transport projects and a small upturn in non-residential building should slow the decline in 2019/20. Following the trough, strong improvements in the residential sector are then expected to drive a recovery in total activity.

The resources-dominated Pilbara has seen enormous downturns in activity and big outflows of people but is expected to rebound reasonably strongly from 2020/21 and then plateau for most of the forecast period.

Visit Report Page

Australian Construction Outlook – Resources

/in /by

The overall resources construction sector is still in decline, but only because of the persistent falls in oil & gas investment. The COVID-19 global pandemic has placed some downward pressure on the resource construction industry but the impact up until the end of June 2020 was more limited than we previously anticipated. Despite this, one bright spot is the strong growth in other minerals, driven largely by iron ore projects. Total resources construction is expected to begin to recover in 2021, increasing strongly from the middle of the year, and rising through to a peak in 2024/25.

The outlook is however, highly variable among the different resource segments.

For more detail, and to subscribe to this report, please visit the report page.

Visit Report Page

Australian Construction Projects Database

/in /by

This latest list of projects included in our forecasts corresponds with the fully revised set of forecasts published in November 2019.

Read more

Australian Construction Materials Forecasts

/in /by

Our latest forecasts assess the implications for construction materials demand of the outlook for each segment of building and construction work. Demand for construction materials is mid-way through a large decline, caused largely by the continuing downturn in residential building, and negative impacts from the coronavirus. The main area of strength was non-residential building, but this segment is entering a decline that is expected to continue for a couple of years. However, road construction is starting to pick up which will help to increase construction materials demand going forward.

Visit Report Page

Australian Construction Outlook – Utilities

/in /by

Utilities construction activity in Australia remains in the middle of quite a strong period of activity. This began with large increases in 2017 and 2018, driven by construction of the NBN and a boom in renewable energy investment, along with smaller upturns in water and gas pipeline work. Activity began to fall at the start of calendar 2019, however, and real declines in work done were recorded in the last two financial years; 2018/19 and 2019/20.

We now expect another leg to this period of stronger construction, however, with growth forecast for 2020/21 and 2021/22, prior to another downturn.

Visit Report Page

Australian Construction Outlook – Residential Building

/in /by

The most consequential development in the residential building sector over the past year has been the COVID-19 pandemic and the responses to it by governments, households and businesses. Residential building was in a downturn prior to the upheaval caused by COVID-19, but we now expect investment to fall further and recover slower, impacted by lower rates of population growth (as a result of near zero overseas migration) and elevated levels of unemployment. Government incentives such as HomeBuilder will bring forward some demand in the short term, but the conditions in the policy itself will limit its reach, and we don’t expect it to go far in offsetting the other forces at play.

In the overall residential building sector, we expect the number of dwelling starts to drop to around 141,000 in financial year 2020/21, down from an estimated 167,000 in 2019/20, and from a peak level of more than 230,000 in 2018. We anticipate most of this decline to occur in the attached dwelling segment, falling from 67,800 starts in 2019/20 to 52,600 in 2020/21, while detached houses fall from 99,400 to 88,400. Further ahead, we expect starts to remain flat in 2021/22, before lifting from the 2022/23 financial year.

Visit Report Page

Australian Construction Outlook – Transport Infrastructure

/in /by

Australia is in the middle of our biggest ever transport infrastructure boom, featuring:

  • An unprecedented collection of big capital city projects (road and rail),
  • A ramping-up of urban renewal, maintenance and improvement programs (including arterial road upgrades and level crossing removal programs), and
  • A general improvement, on a less splashy scale, of regional works (including Inland Rail and ongoing, large scale upgrades on the Bruce, Pacific, and Princes Highways).

It is important to note that transport infrastructure is one of the areas of building & construction that is least impacted by the implications of COVID-19. This report provides a concise explanation of the nature and magnitude of the impacts in the various segments of transport-related construction. It also provides a fully revised set of forecasts, and corresponding project list, for all segments of transport infrastructure construction looking ahead ten years.

Visit Report Page

Electricity, Gas and Water: Cost & Activity Forecasts

/in /by

In the electricity, gas and water (EGW) sector, the outlook is for subdued cost inflation over the next few years. The inflationary environment in the Australian economy is expected to remain weak for a few years. The outbreak of Coronavirus (COVID-19) and the restrictions put in place to slow its spread have caused big shifts in the labour market. Some of this weakness is forecast to flow through to lower cost growth in the coming quarters.

It is important to note that there is likely to be only a small and short-term impact from COVID-19 on the utilities construction sector, in comparison to other construction sectors. A large proportion of construction work is government funded and much of the rest is undertaken by private sector owned utilities businesses, which should not be greatly affected by weaker demand during the pandemic.

Visit Report Page