Master Builders Australia recently released its five-year forecasts for the nation’s building industry out to 2024, and the outlook is mixed across all the construction sectors.
While engineering construction work is set to expand 12.5% by 2021/22 – the largest rise in the sector since the mining investment boom in the early 2010’s – the commercial and home sectors are likely to experience significant fluctuation over the five-year period.
Low interest rates and a booming population has resulted in steady growth in commercial building over recent years, with an 8% increase during 2018/19 compared to the 2017/18 period. That’s expected to see another boost of 6.5% through 2019/20, before a drop propelled by factors including slow progress in government infrastructure work and changes to planning controls.
The result is projected to be an 8.9% decrease in the commercial building project by the end of 2023/24, as compared to 2018/19.
Commenting on the forecast, Master Builder Australia’s chief economist, Shane Garrett said: “The segments to see the toughest conditions over the next few years include building for accommodation, offices and education. These are the parts of the market that generally performed best over recent years.
“But it’s not all bad news – retail/wholesale, transport buildings and health facility segments are expected to see steady growth.”
In home building, the situation stands in contrast. Forecasts predict that, while there is no immediate end in sight for the new home building slump, recovery is on the horizon.
The record high building rate of the last decade, led by a prominent increase in apartment and unit buildings, is coming to an end. And so is consumer confidence. That’s the critical factor Master Builders envisages driving new home building commencements to a low of 167,444 in 2020/21 – a 28.3% drop from the 2015/16 peak.
“From there, we expect that the strong market fundamentals will drive new home building higher,” said Garrett. “By the end of our forecast horizon in 2023/24, new home starts are anticipated to recover to 187,658 – an 11.9% increase on the low point of the cycle expected in 2020/21.”