The next 12 months will present a number of opportunities and threats for different states and sectors throughout the building and construction industry in Australia, the latest forecasts to be released next month will show.
In a statement released on September 20, the Australian Construction Industry Forum (ACIF) executive director Peter Barda says the industry in Australia is having to cope with ‘seismic’ global and domestic changes with most of the indicators pointing to weakening demand.
“There have been significant changes in the world and local economies since our last update in April,” Barda says. “Events since then point to weakening demand. The big question is: how are these factors affecting demand for building and construction work?”
Full ACIF forecasts covering each sector within residential, non-residential and engineering construction for each state will be released on October 30 and the organisation will conduct a series of conferences throughout the country regarding the outlook for each state early next month.
Here’s what the forecasts will show:
- Western Australia will continue to be the country’s star performer. Despite reports about resource companies pulling back on projects, the engineering sector will remain strong for another decade, driven by enormous gas and minerals projects and work on associated infrastructure. Investments in new offices and retail outlets will drive modest growth in non-residential building while the residential sector will experience some weakness in the short term but reasonable growth from 2013/14 onward.
- Likewise, Queensland will expect continued strong growth in civil construction due to gas and mineral projects and associated investment in railways, ports and bridges. Housing will return to growth in 2013/14 after two weak years. Non-residential construction however, will be flat across the board apart from bright spots in housing and health.
- In the short term at least, New South Wales expects reasonable growth in new houses and apartments, decent levels of non-residential construction activity driven by growth in retail, health and office investment, and ‘solid’ growth in civil construction on the back of significant road and rail expansion. In the long term, however, despite ‘chronic’ levels of undersupply having persisted for more than a decade, the ACIF expects sluggish activity at best.
- Despite the cancellation of the Olympic Dam expansion, civil construction activity levels in South Australia are set to remain fairly healthy in the short term on the back of reasonably strong mining and mineral-related activity as well as work on telecommunications, pipelines and electricity projects. That, however, is where the good news stops amid a poor short term outlook in both residential and non-residential building, with no recovery in non-residential, apart from limited industrial investment, expected until at least well into the next decade.
- Having enjoyed reasonably good conditions over recent years amid strong public sector works, the outlook for the Australian Capital Territory is not encouraging, with subdued residential prospects, flat activity at best in non-residential building and low volumes of work in engineering amid flat roadwork activity and declining water and sewerage works.
- With the decade-long residential building boom at an end and a lack of significant resource projects to drive engineering, the outlook for Victoria is middling. Overall residential demand is retreating as the apartment boom comes to an end, non-residential investment outside of the industrial sector is set to decline over the short to medium term and activity levels are set to remain soft across all parts of the engineering sector.
At this stage, the ACIF has not released summary forecasts for either Tasmania or the Northern Territory. Full forecasts for these states/territories will be included with the release of ACIF forecasts next month.