Australia Construction Market Size, Trends and Forecasts by State, Territory and Sector (Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential) and Forecasts, 2022-2026
Summary
The construction industry in Australia is expected to shrink by 0.4% in real terms in 2022 and 2.7% in 2023, owing to headwinds caused by rising inflation, high construction material prices, rising interest rates, supply chain disruptions, and continued weakness in the residential construction sector. According to the Australian Bureau of Statistics (ABS), the producer price index of input prices to the residential construction industry rose by 16.2% year on year (YoY) in the first three quarters of this year. Labour shortage is another significant factor that is leading to cost overruns and construction delays. According to Infrastructure Australia, which is the independent statutory body advising the federal government on infrastructure, as of October 2022 public infrastructure projects (including small capital projects) faced a shortage of 214,000 skilled workers. It further estimates labour demand to peak to 442,000 in 2023, which is more than double the projected available supply.
The industry is expected to rebound at an annual average growth rate of 3.1% from 2024 to 2026, supported by the government’s continued focus on infrastructure development. The Albanese government released its federal budget for the Financial Year (FY) 2022/2023 (July 2022 to June 2023) in late October 2022. The budget includes significant allocations for the transport infrastructure, energy, housing, manufacturing, and digital infrastructure sectors. As part of the FY2022/2023 Budget, the government announced an allocation of AUD25 billion ($18.4 billion) in clean energy spending and AUD9.6 billion ($7.1 billion) for vital infrastructure projects, over the next four years. Additionally, it also announced a plan to build one million new homes over a period of five years, starting from mid-2024. In another positive development, the government introduced legislation in November 2022 to establish the AUD15 billion ($11 billion) National Reconstruction Fund (NRF), which is one of the government’s key election commitments. The NRF will provide financing to projects across seven priority areas, with an aim to diversify and transform the Australian economy. According to Infrastructure Australia, the five-year pipeline of major public infrastructure projects is valued at AUD237 billion ($165.6 billion), as of October 2022; this is an increase of AUD15 billion ($10.5 billion) over the last 12 months.
The report provides detailed market analysis, information, and insights into the Australian construction industry, including -
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