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Large rise in construction work over next 12 months
Offsetting cycles in the various segments to keep total activity higher over next five years
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Large rise in construction work over next 12 months
Offsetting cycles in the various segments to keep total activity higher over next five years
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The Australian construction industry entered a solid upswing in the second half of 2021, following three years of decline, and growth is now accelerating. We estimate there was a total increase of 5% in construction activity in 2021/22 (in real terms), and a further increase of 15% forecast for FY2023.
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After reaching close to a record high in FY2023, total activity is expected to then remain at or near this peak level for the following five years. However, this forecast of consistently high construction over the coming years belies some large differences, as the cycles in the various sectors and states act to offset each other.
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Below we provide some summary charts, and key points, for each sub-segment of building and construction in Australia.
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Snapshot of Sectors
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- A large downward correction in residential building is underway – led by houses
- Drivers include the end of HomeBuilder scheme (and its artificial boost), plus rising interest rates
- House approvals are down 30% over last 6 months
- Bottlenecks have caused a large backlog – so work done won’t fall until 2023
- Large increase in FY2021 due to renovations done under HomeBuilder scheme
- Number of new project starts has been falling since September Qtr 2021
- But work done has seen only small falls thus far, due to delays in getting work completed – larger declines to come during FY2023
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Non-Residential Building:
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- Work done is rising significantly at present, following a 24% increase in work commenced in 2021
- FY2023 is expected to be the peak year for work done, with starts likely to decline thereafter
- Drivers of current growth are hospitals, retail and accommodation
Transport Infrastructure:
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- Large upturn is underway – with big increases in commencements, and initial increases in work done, having occurred during FY2021/22
- Large pipeline of major urban transport projects in capital cities
- Road commencements were up 50% (in real terms) during year to March 2022 – presaging a big upturn
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- Third boom in a decade has begun, driven by a large wave of renewable energy and battery storage investments
- Value of project starts in electricity sector was up 40% in FY2021, and remained high in FY2022
- Peak in work done expected in FY2023 and FY2024
- Increased NBN spending
- Gas pipelines work will rise, to boost domestic supply
- Upturn expected over next three years, with total increase of 50% in real construction work done
- LNG and critical minerals investments will be the key drivers
- Other minerals segments have been increasing for a number of years, but will now be flat, as will coal.
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Our most recent reports:
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Australian Construction Outlook - Transport Infrastructure
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This report provides a detailed picture of the current upturn in infrastructure construction, including the timing of major projects, key drivers, and the expected timing of the peak and next downturn.
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Australian Construction Outlook - Overview
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This new report examines the outlook for total construction activity in Australia.
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Australian Construction Outlook - Residential Building
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Our new report provides an assessment of the likely severity and duration of the current downturn in Australia's residential building markets.
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Australian Construction Outlook - Resources
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Our new report examines the likely duration, speed and composition of the upturn currently getting underway in Australia's resources construction sector.
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Australian Construction Outlook - Non-Residential Building
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This report examines the current downturn underway in the non-residential building sector, describes its causes and forecasts the timing of the coming recovery, by sector and state.
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