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Long-term growth forecast for building and construction sector

16 August, 2013

The Australian Construction Industry Forum (ACIF) has forecast overall positive sentiment for the national building and construction sector, with a number of states expected to enjoy sustained long-term growth after a short-term period of moderation.

Queensland building and construction trending upwards

The popular rhetoric that the sky is falling in Queensland building and construction can't be sourced back to fact, as construction industry data on upcoming demand shows good reason for an uplift in sentiment.

Industry forecasts by Australian Construction Industry Forum show that Queensland is one of several states where the overall trend across all building and construction work remains in a positive direction. Some areas of work will still need to get through some moderation in the short term, however the outlook for the next decade is upwards.

It is true - engineering construction has peaked - however the decline still leaves this sector at a historically high level even beyond 2022, so that there is plenty of work yet to be done.

Non residential building, which for most states of Australia is forecast to remain flat for the next few years, for Queensland will enjoy sustained growth over the longer term.

"Reading past the headlines is crucial when planning for your business," said Peter Barda, executive director of Australian Construction Industry Forum.

Improved outlook for New South Wales

New South Wales building industry is set to enjoy improved prospects from 2016, after a period of moderation. While residential building is a key part of the lift in demand forecast, with strong growth over the medium to long term, building and construction in non-residential work, including commercial premises, community facilities and more, are also looking positive for New South Wales. The forecasted growth outpaces other states, making this state one of the most optimistic in the country.

"The ACIF Forecasts point to New South Wales returning to a good rate of work after a number of years of struggle," Barda said.

Positive prospects for Western Australian building

Building and construction demand in Western Australia remains optimistic, with all sectors set to enjoy positive growth.

The flow of demand across all sectors continues in this state, driven by a resources construction boom now passing its peak. Increased industry and population require a built environment to work, rest and play all of which needs to be designed, built and maintained by our industry.

"Businesses in this state are enjoying growth in demand the envy of all other states, however decision makers need to use good quality information to determine how to most effectively use their staff and resources," Barda said.

Northern Territory building and construction expecting strong growth

If an escape from the chill of winter isn't enough reason to shift to the north, recent industry reports on the demand for building and construction work in the Northern Territory should convince many businesses to travel.

While many regions will experience varying outlooks across residential, non residential building and engineering construction work, the Australian Construction Industry Forum latest Construction Market Report for the Northern Territory shows positive growth for all sectors over the short - medium term.

Northern Territory has enjoyed a sustained period of strong demand in engineering construction. While the peak has been crossed, the rate of work will remain at historically high levels over a long period. And this has a bump-on effect for other sectors too.

"Construction staff and others working in mining, infrastructure and other engineering projects increase the demand for other building work. These businesses and their staff need housing, health services, entertainment, retail therapy, all of which benefits the region and the local building and construction industry," Barda said.

Tasmanian builders enjoying the spoils of demographic change

While much of Australia is set to experience a flat to declining non residential building sector, due to its unique set of factors, recent industry forecasts show that Tasmania is set to see an outlying result in demand for non-residential work.

“Demographics play a big part in this,” Barda said.

“An ageing Tasmanian population creates an increased need for aged care facilities and health services.

While the sharp uptick in demand for these assets will moderate when compared with the past decade, it will remain at relatively high levels.”

The Tasmanian engineering construction sector also has good news from the ACIF Forecasts. There too, drivers in the local demographic are seeing over time an increase in the level of engineering work that may make interstate migration an option for some players.

Lumpy but positive outlook for ACT

Building and construction in Australian Capital Territory will be mainly held up by large projects in non residential building and engineering construction.

The flow of work across these sectors tends to be lumpy due to its reliance upon project work, however the medium term outlook is for modest growth after an initial period of increased activity.

"Businesses in this state in particular need to have an ear to the ground, know what is coming and the surety or vulnerability of project work, to be able to steer their staff and resources in profitable directions," Barda said.

Engineering construction remains historically high in South Australia

Despite levels of engineering construction work in South Australia falling off from a peak, the state's engineering construction industry still has plenty of work to do.

The short term outlook shows a softening before a return to moderate growth, which remains at historically high levels for the state. Notwithstanding the Olympic Dam setback, there is still strong demand in mining and related engineering over the next nine quarters, as well as telecommunications, pipelines and electricity.

"Businesses in South Australia need to keep aware of the work that is coming in order to stave off poor decisions," Barda said.

Victorian home builders see fall back in demand

Victorian residential builders have experienced a high level of activity over the past five years, the envy of all other states. Latest industry reports show that this level are set to fall back over the next three years, reveals industry reports. This may leave local home builders in Melbourne and Victoria to lament that their business is in a decline, when comparing with past good times.

The better news is that after a period of moderation, the residential building industry will resume good growth.

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