Australia’s architectural services industry is estimated to rise in 2013-14 after a five-year downturn directed by the slowing construction market.

A new research report from IBISWorld has predicted that revenue for architecture services in Australia is estimated to rise by an annualised 0.4 per cent over the five years through 2013-14, corresponding with a slump in the value of total building construction.

The report was created in response to changing demand conditions for the industry, particularly in multi-residential housing.

The winding back of educational building investment, commercial projects and weaker housing construction has contributed to the nation’s construction downturn, which experienced its 39th consecutive month of decline in August.

Architectural Services Industry

Architectural Services Industry

According to the report, the non-residential building market has been supported by the injection of a $16.2 billion federal investment for school refurbishment under the Building the Education Revolution (BER) program.

This school building program took the largest chunk of the $42 billion Nation Building – Economic Stimulus Plan to support these projects across Australia.

The report also identified that the commercial market is still expected to fall due to slower economic growth and the lasting impact caused by the Global Financial Crisis.

“Architects have faced subdued conditions in the new housing market, with the value of construction remaining flat over the past five years,” explained IBISWorld industry analyst Sebastian Chia.

There is also declining investment in traditional single-dwelling housing units in favour of denser residential choices, with growth across the townhouse and apartment design market.

Multi Residential Building

Multi Residential Building

In contrast, IBISWorld has predicted that low interest rates will re-ignite both the single and multi-unit sector with a prediction of rising house investment.

In construction, an August 2013 report from the Australian Industry Group (AIG) and the Housing Industry Association (HIA) revealed that apartments were actually leading the decline in the construction’s industry but also predicted the the industry stabilising.

“The house building sector remains close to the point of stabilisation with lower interest rates starting to provide some support to levels of activity and new orders within the sector,” said AIG director Peter Burn.

In response, HIA chief economist Harley Dale welcomed the improvement but warned that activity and new projects were still yet to gain momentum.

“In other words there is a very long way to go, even though super low interest rates are providing some welcome assistance,” Dale said.

Low Interest Rates

Low Interest Rates

The IBISWorld report predicted that industry revenue for apartment and multi-residential would total $16.3 billion in 2013-14, up 7.9 per cent from the previous year and representing strong annualised growth of 4.8 per cent over the past five years.

Interest rates alone will not save the market, however, with architects encouraged to collaborate and pick up their game – IBISWorld reported that the industry has faced growing competition from “vertically integrated” building firms in both construction and engineering over the last five years.

“Clients are growing towards more integrated service offerings, and architecture firms have to improve links with construction firms or even offer their own range of services to compete,” said Chia.

“The Architectural Services industry has a low level of market share concentration,” the report states.