Seven areas within building and engineering are set to defy an overall ‘glide’ toward softer conditions across Australia’s construction sector, the latest report says.
In its latest forecasts, Master Builders Australia said it expects the overall value of construction work done to ‘glide lower’ over coming years and be 2.6 percent lower in 2023/24 compared with 2018/19.
Whilst government spending on transport projects will provide a welcome boost, it said prospects for new home building are mixed whilst activity in commercial building will fall back from current elevated levels.
Nevertheless, it said several sectors will defy the overall trend and will instead push higher in coming years.
As outlined below, these include rail, roads, transport buildings, healthcare, home renovations, gas pipelines and coal/coal handling facilities.
“Over the medium term, our forecasts see total construction activity gliding lower and the size of the market in 2023/24 is anticipated to be 2.6% smaller than in 2018/19,” Master Builders says in its report.
“Government-led projects mean that transport infrastructure will be one of the strongest performers but prospects for new home building are more mixed and some areas of commercial building will be doing it fairly tough.”
In its report, Master Builders looks at prospects across residential, commercial and civil construction.
In residential, it says the market for new home building has been impacted by a combination of a cyclical downturn, tighter credit conditions, barriers to foreign buyers and falling house prices.
All in all, Master Builders expects new dwelling commencements to bottom out at 168,000 in 2020/21 before recovering to around 187,660 by 2023/24.
At this level, the trough within the market for new home construction will be 28 percent below record levels seen in 2015/16 but will still represent elevated levels of building by historic standards.
Whilst new building activity will drop back, meanwhile, the outlook is better for home renovations, which will grow by a cumulative total of 4.6 percent over the next five years.
Driving this, Master Builders says, is the large number of new homes which were built in the late 1980s and which are now ripe for updating.
Outside of housing, Master Builders says the ‘star’ performance of the commercial building sector will continue for one more year and that record levels of activity in this sector in 2018/19 will rise to new highs in 2019/20.
Beyond that, however, Master Builders says activity will revert back to normal levels as work on office and accommodation projects drops back from record highs. Overall, therefore, commercial building activity in 2023/24 will be lower compared with 2018/19 to the tune of nine percent.
Two sectors will buck this trend.
In healthcare, Master Builders expects the value of work done to increase from $3.336 billion in 2018/19 to $3.750 billion in 2023/24 as governments switch focus toward social infrastructure to complement capital spending on economic infrastructure.
Meanwhile, work on transport building projects will increase from $1.198 billion in 2018/19 to $1.361 billion by 2023/24 thanks to work on new stations associated with large-scale inner urban rail projects..
Finally, Master Builders expects further growth in civil construction to the tune of 12 percent between 2018/19 and 2020/21 before activity in this sector eases thereon after as strong activity in road and rail construction offsets a drop-off in work associated with the National Broadband Network and weaker activity in electricity, oil and gas, water and recreational facilities.
Over the five years to 2023/24, Master Builders expects work on road and rail projects to rise by 12 percent and 84.6 percent respectively. Other growth sectors include harbours (up 146.6 percent, pipelines for transporting gas (46.9 percent) and coal/coal handling facilities (up 23.7 percent).