The construction industry is showing signs of both good and bad health, according to the latest forecasts from the Australian Construction Industry Forum's (ACIF) Construction Forecasting Council.
Executive director of the ACIF, Peter Barda, says that activity in non-residential and engineering construction has held up because of government spending, but private sector investment is struggling because of the difficulty of obtaining finance.
"Private sector spending on non-residential construction is still depressed by lack of confidence, and a shortage of development finance, whilst government spending on education and health infrastructure has made up about half of the private non-residential activity lost through calendar 2008," he says.
Non-residential activity is expected to fall further once the Building the Education Revolution spending runs out.
"In the residential construction sector, activity in new house building during 2008/2009 has been very strong, and will continue at reasonable levels, although lack of development finance continues to depress the market for apartment construction," Barda says.
"Residential building in 2009/10 and 2010/11 will continue to be strong."
Government spending on infrastructure and expected spending on the national broadband network are expected to maintain high levels of activity in engineering construction.
In residential building, while approvals have continued to slide in recent months, substantial pent-up demand remains for housing and will drive real growth although there is uncertainty over the impact of the scaling back of the First Home Owners Grant, says Barda.
"Demand is still there for housing: stocks still remain in short supply, and rents are continuing to rise ... And once the commercial developers re-enter the market and house price growth starts to improve, this sector will record strong growth."
