Construction outlook “steady as she goes”

The Australian Construction Industry Forum (ACIF) has released its latest building activity outlook, which forecasts a five per cent drop in value of work to $239 billion in 2018-19.

Although housing construction continues to fall, ACIF predicts the increase in building activity for non-residential infrastructure such as office buildings, education facilities, railway and roads will keep the construction sector buoyant.

Residential building activity is expected to contract by 1.5 per cent 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.

In contrast, non-residential building is going through a healthy stage of growth, with the value of work rising by 11 per cent 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.

Work done in engineering construction grew by 21 per cent last year to reach $67 billion. The ACIF is predicting that value to climb to $76 billion in 2020-21 thanks to sustained increases in transport infrastructure and utilities projects.

Heavy industry including mining is expected to drop by $11 billion in the value of work done this year but is forecast to recover and grow at six to eight per cent per annum over the next two years.

With slower conditions come less jobs, which the overall sector expected to lose around 29,000 jobs this year, falling to 1.1 million jobs. ACIF said the number accounts for 9.2 per cent 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 years, with expectations that workers displaced from the cyclical downturn in residential building activity will be largely soaked up by the burgeoning engineering construction and commercial building areas.

According to ACIF, the residential activity downturn will continue to have a negative impact on the sector, reducing consumer confidence and further eroding already fragile investment intentions. However, ACIF predicts the level of total building and construction work will stabilise and hover around $240 billion a year mark over the next two to three years.

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