Housing and infrastructure boom to continue

It has been a roller coaster ride for the Australian construction industry in 2021, but all indications are pointing to a boom in 2022, with housing and infrastructure construction set to lead the way, according to the Australian Construction Industry Forum (ACIF).

ACIF is projecting a six per cent increase in the total value of building and construction work to $256 billion in 2022.

Infrastructure construction is expected to grow by 7.5 per cent in the next 12 months, thanks to expanded government development programs. ACIF predicts the growth to carry through to at least 2023-24.

“Governments have committed to a new wave of infrastructure investment, precipitating a surge in ‘hard’ infrastructure including energy, transport, and water, as well as in ‘social’ infrastructure including health, education, and cultural and community buildings,” ACIF said.

“A full pipeline of work is challenged by materials and trades and professional shortages. Lingering restrictions – both interstate and international – are constraining skilled worker supply.”

In the housing sector, record low interest rates and government incentives such as the HomeBuilder program have driven strong demand for housing. This has led to an overwhelming demand for work and supplies.

Input cost for houses has been rising at an alarming rate, and has left plenty of builders with no choice but to pass the cost on to consumers, ACIF said.

The body expects the residential building sector to surge over the next two years, as builders churn through their backlogs.

“Twin booms in house building and infrastructure indicate that the economic recovery will be led by building and construction, with twin growth trajectories set to add more than 100,000 jobs and to reach $256 billion in 2022,” said ACIF Chief Forecaster, Kerry Barwise.

However, despite the positive surge, big challenges lie ahead for the industry, he added.

“Shortages of building materials and skilled trades, as well as alarmingly high input costs and rising house prices represent significant challenges, all of which may add pressure to already rising inflation.”

ACIF also forecasted non-residential building will decrease modestly over the next two to three years. Strong spending increases in social infrastructure, including health, aged care, and other miscellaneous areas, will not be sufficient to offset expected falls in new offices, retail/ wholesale trade, accommodation, commercial entertainment and recreation, the organisation added.

On the other hand, heavy industry (including mining) is projected to grow significantly by more than 20 per cent over the next three years. This includes traditional areas such as iron ore, coal, and LNG, as well as emerging areas such as hydrogen.