ACIF FORECASTS THE OUTLOOK FOR CONSTRUCTION IS ‘STEADY AS SHE GOES’

The latest industry forecasts indicate that building and construction work activity in 2018-19 will fall by 5% to $239 billion. The outlook for building and construction activity will be finely balanced, with the current uptick in Non-Residential Building activity combined with surging Engineering Construction activity expected to largely offset the downturn in Residential Building activity.

“The recent upturn in Non-Residential Building has offset falls in Residential Building activity. While this has been quite important in sustaining workflow, it must be recognised that Non-Residential Building activity will not be enough by itself to offset the declines in Residential Building activity.” said Bob Richardson, Chair of ACIF’s Construction Forecasting Council, which oversees the production of the ACIF Forecasts.

Residential Building Activity

Residential Building activity is already in decline with a contraction of 1.5% is expected this year (2018-19), bringing the value of work done to $103 billion. Recent falls in house prices and deteriorating market conditions are expected to drive steeper falls in Residential Building activity with the value of building work projected to fall to $91 billion by 2020-21.

Building and Construction Work Done ($ billion)

Non-Residential Building Activity

In contrast to the Residential Building market, Non-Residential Building is midway through a growth phase, with the value of work rising by 11% last year (2017-18) to reach $42 billion. Expanded investment in accommodation, offices, and other commercial buildings has buoyed Non- Residential Building activity. Government and public sector investment are also supporting growth especially in education, defence and community facility projects.

Engineering Construction Activity

Work done in Engineering Construction grew by 21% last year to reach $67 billion. Continued strong growth is forecast, raising work done to $76 billion in 2020-21. Significant and sustained increases in construction of transport infrastructure and in utilities projects is underway and gathering momentum. Heavy industry including mining is expected to see a reduction of $11 billion in the value of work done this year but is forecast to recover and grow at 6-8% per annum over the next two years.

Building and Construction Employment

Employment in building and construction activities is expected to lose 29,000 jobs this year, falling to 1.1 million jobs. This accounts for 9.2% of expected employment across the Australian economy in 2018-19. Construction employment is projected to hover around 1.15 million jobs over the next three-to-four year period, reflecting expectations that workers displaced from the cyclical downturn in Residential Building activity will be largely soaked up through burgeoning Engineering Construction activity and continuation of the upturn in Non- Residential Building activity.

Industry Outlook

Although the downturn in the residential market may spill over into the rest of the economy reducing consumer confidence, eroding already fragile investment intentions, and dragging down growth – the level of total building and construction work is projected to stabilise and hover around $240 billion a year over the next two-to-three years.

About Australian Construction Industry Forum (ACIF)

Australian Construction Industry Forum (ACIF) is the trusted voice of the Australian construction industry. ACIF facilitates and supports an active dialogue between key players in residential and non-residential building, and engineering construction, other industry groups, and government agencies. ACIF’s focus is on innovation, collaboration, equity and sustainability for the industry.

ACIF Members are among the most significant associations in the industry, spanning the entire asset creation process from feasibility through design, cost planning, construction, building and management. ACIF harnesses the resources of its Members to research and develop initiatives that benefit businesses of all sizes, from the largest of construction companies to small consultancies. More information on ACIF is available from www.acif.com.au.

About ACIF Forecasts

ACIF Forecasts are rolling ten-year forecasts of demand across residential, non-residential and engineering construction in Australia. The Forecasts are prepared by respected economic modellers, using high quality data sources, and are overseen by ACIF’s Construction Forecasting Council, an industry panel of expert analysts and researchers.

ACIF Forecasts are used by thousands of professionals each year, from across the full range of stakeholders, from major organisations to small consultancies. ACIF Forecasts are available as the Australian Construction Market Report and detailed numbers are available by subscribing to the Customised Forecasts Dashboard. More information about ACIF is available from www.acif.com.au.

The ACIF Forecasts are available from Australian Construction Industry Forum from today. Available in two formats: Australian Construction Market Report, a 100-page expert analysis on the economy and industry sectors ($300), plus the Customised Forecasts Dashboard ($250), an online portal where users can query the full ACIF Forecasts database on 20 work types, over a twenty year period. As an industry not-for-profit, ACIF produces this information to assist businesses and governments at all three levels navigate the rapidly changing marketplace and help them plan for the future. Find out more at www.acif.com.au/forecasts.