A surge in detached home building and infrastructure construction work will drive growth in activity and employment within Australia’s construction sector, new forecasts show.
Released by Australian Construction Industry Forum (ACIF), the Construction Market Forecasts suggest that the overall dollar value of construction work done will grow by 5.8 percent and 3.5 percent over the next two years to go from $241.6 billion in the COVID-impacted 2020/21 to $264.6 billion in 2022/23.
As a result, the number of people employed throughout the sector is expected to grow by 55,000 or 5.2 percent from 1.152 million as at June 2021 to more than 1.2 million in 2021/22 – with increases to be concentrated in Queensland, Western Australia and South Australia.
Leading the charge are the residential and engineering sectors.
According to the forecasts, in particular growth sectors:
- The dollar value of work done on construction of new detached homes is expected to increase by 10.3 percent in 2021/22 and 4.5 percent in 2022/23 from $37.367 billion in 2020/21 to $43.067 billion in 2022/23 – well above the trough of $35.398 billion in the COVID impacted 2019/20.
- Having already increased by 14.7 percent in 2020/21, the dollar value of work on ‘large’ alteration and additions (those for which council approval is required) is expected to increase by 13.0 percent in 2021/22 to go from $10.667 billion in 2020/21 to $12.116 billion in 2021/22.
- On small home renovations, activity is expected to increase by a further 3.8 percent in 2021/22 and 3.0 percent in 2022/23 having already increased by 13.6 percent in 2020/21 to go from $33.3 billion in 2020/21 to $34.568 billion in 2021/22 and $35.613 billion in 2022/23.
- Leading the way in engineering construction will be bridges, railways and harbours, where the value of work will surge from already elevated levels of $12.3 billion to a peak of $17.0 billion in 2023/24 amid a massive pipeline of urban rail projects.
- Next, mining and heavy industry projects are expected to increase from $25.1 billion in 2020/21 to $31.9 billion in 2024/25.
- Finally, another growth area is social infrastructure, where the value of work on hospitals is set to grow from $5.2 billion in 2021/22 to $6.957 billion in 2023/24.
Activity in aforementioned areas will be driven by several factors.
In new detached housing, for example, strong conditions are being driven by work associated with the Commonwealth HomeBuilder program as well as other state incentives and ongoing low levels of interest rates.
In large renovations, meanwhile, activity is being driven by a combination of the part of the HomeBuilder grant which related to the renovation of existing homes, a refocusing on existing properties of those who have been priced out of a rising market for more expensive properties and a desire from homeowners to improve their space in light of COVID.
On this latter point, the addition of extra bedrooms along with home offices/studies and schooling area are reported to be popular.
Outside aforementioned growth sectors, however, other sectors which have been more heavily impacted by the pandemic and experiencing more subdued levels of activity.
These include multi-residential construction and a range of commercial building sectors such as offices, retail/wholesale trade, accommodation and commercial entertainment and recreation.
At any rate, the healthy picture overall remains reliant upon the pandemic remaining under control – both locally and globally.
Moreover, the strong growth in activity and employment will place further pressure on already stretched resources.
Still, Nerida Conisbee, Deputy Chair of ACIF’s Construction Forecasting Council, said the outlook was positive.
“The new development market was hit hard by the COVID downturn, but the pipeline for the industry is now looking very strong,” Conisbee said.