Australia will experience a boom over coming years that will see the value of construction work done on the nation’s buildings soar to record highs, new forecasts suggest.

And a shift in focus regarding civil projects from transport to renewable energy and mining will amplify resourcing challenges in regional areas.

At its bi-annual Construction and Economic Outlook Conference 2025 to be held in Sydney and Melbourne on September 17 and September 24, Oxford Economics Australia will explore the outlook and major trends for the economy in general and the construction sector specifically.

In terms of the economy overall, Oxford expects GDP expansion of 1.7 percent this year followed by 2.1 percent next year as momentum begins to accelerate.

This will occur as official interest rates fall from current levels of 3.6 percent to 3.1 percent – with one more cut this year followed by a final cut in the first quarter of 2026.

Turning to construction, the report suggests that the value of building work done will rise by 20 percent over the next four years to reach record levels of $190.3 billion by 2029/30 in constant 2022/23 prices.

In the residential sector, Oxford expects the number of dwelling commencements to increase by a cumulative 30 percent over the four years to reach 239,800 by 2029/30.

In its report, Oxford says that several living sector assets are all firing. This includes student accommodation, build-to-rent, retirement living and land lease.

Social and affordable housing is also receiving a major boost from the National Housing Accord.

Nonetheless, typical mass market house & land packages and infill apartment development is where most of the heavily lifting will need to be done to meet housing targets, Oxford says.

Turing to commercial/non-residential building, Oxford anticipates elevated levels of public sector activity on account of a prolonged wave of hospital projects and work associated with the 2032 Olympics.

In the private sector, weakness in areas such as office building will be partly offset by a boom in data centre investment which is concentrated in Western Sydney and Melbourne.

Engineering in transition

Turning to the civil sector, the forecasts suggests that the focus of work is shifting as the boom in publicly funded transport projects is peaking.

Areas of opportunity include:

• Energy, where the value of work done Is expected to reach $16.7 billion by 2029/30 as Australia works toward its 2030 climate targets and work to upgrade the transmission network continues to drive solar and wind investment. This will be evident everywhere apart from Western Australia, where a lack of transmission investment is causing renewable activity to lag the rest of the nation.
• Mining, where activity will continue to grow strongly and reach $40 billion by FY 2030 supported by several large iron ore projects.
• Water, where the value of work is expected to reach $5 billion by FY 2030 supported by a major capital works program being undertaken by Sydney Water.

However, Oxford suggests that the shift from urban transport to energy and mining work in regional areas may pose further challenges for industry capacity on account of the difficulty in enticing people to move away from cities.

In order for this to be addressed, Oxford says that it will be necessary to create a long-term guaranteed pipeline of work to enable those who do move to build careers and settle with families.

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