The construction sector in Australia is set to deliver $243 billion in opportunities and grow its workforce by up to 50,000 people this year, new forecasts suggest.
Releasing its latest forecasts, Australian Construction Industry Forum (ACIF) said it expects the overall dollar value of construction work done throughout the nation to increase by 2.7 percent from $236.8 billion in calendar 2020 to $243.1 billion this year.
Beyond that, activity will ease next year before expanding again and reaching almost $246 billion in 2023.
Meanwhile, the number of people employed in the sector will rise by around 50,000 from 1.152 billion at the end of 2020 to around 1.2 billion in 2021.
Driving this will be the residential sector, where a surge in detached house construction and strong activity in home renovations will offset subdued conditions multi-storey building.
Courtesy of HomeBuilder and other incentives, the number of detached new homes which are completed this year is expected to rise by 13.1 percent from 105,000 in 2020 to 119,000 in 2021.
That will see the value of work done rise from $35 billion to $39 billion.
Combined with modest growth in home renovations, this will more than offset subdued conditions in multi-residential building.
In engineering construction, meanwhile, the value of work is expected to increase by 2.6 percent from $88.6 billion in 2020 to $90.8 billion in 2021 before growing by another 5.2 percent to reach $95.6 billion in 2022.
Contributing sectors include:
- Public sector rail, as work on large-scale projects ramps up in 2022.
- Electricity and pipelines, amid several projects which aim to promote sustainability and reliability of energy supply including investment in electricity network interconnectors such as EnergyConnect and Humelink.
- Water and sewerage, driven by large projects which were announced in 2019 and 2020 including significant dam works such as Hells Gate Dam in Queensland.
- Heavy industry and mining, where sustained growth is expected over coming years amid the largest inflow of new projects into the Cordell database which has occurred over the last six months for any six-month period for the past five years.
Activity will be more subdued, however, in commercial and non-residential building.
Here, the value of work is expected to contract over the next five years from almost $49 billion in 2020 to $40.5 billion in 2025.
This is happening as uncertainty over the future of work, lower levels of immigration, a halt to inbound arrivals and lower population growth impact investment plans for office, retail and accommodation facilities.
Even here, however, there will be opportunities.
Strong growth is expected for construction of health and aged care buildings as the Commonwealth Budget included big ticket items to deal with COVID-19, mental health capacity expansion and improved aged care provision.
Huge rail projects, meanwhile, will see greater activity on building of train stations.
Overall, ACIF says the forecasts are being underpinned by improving economic conditions as Australia and major trading partners gain greater control over the pandemic and economic growth is being supported by policy stimulus, the rollout of vaccines, further relaxation of government restrictions and greater mobility.
Still, there are downside risks to this expectation.
These include ongoing uncertainty over: the future containment of the pandemic and the pace of vaccine rollout; the resumption of normal levels of international travel; future levels of immigration; the likely unevenness of the economic recovery across sectors and locations; how households and businesses will respond to withdrawal of temporary support measures; potential delays and cost blowouts on major infrastructure projects; and when business will reboot investment plans and expand capacity and employment.
Nevertheless, Bob Richardson, Chair of ACIF’s Construction Forecasting Council, said the industry can anticipate better times ahead.
“Recovery is on its way!” Richardson said.
“Whilst COVID and the lockdowns significantly impacted our industry in 2020, returning business confidence and the Government’s stimulus measures will provide an uplift, and overall we expect to see a rebound in activity in 2021-2022.”
The forecasts provide a breakdown of the outlook by states and key sectors.