The latest construction industry forecasts show that the next twelve months will be make or break times for many businesses, from architecture and design, to building and concreting.
The industry’s peak consultative body, the Australian Construction Industry Forum (ACIF), has updated the ACIF Forecasts.
They show a fragmented outlook for the industry, with improving prospects for one sector, a bleak time ahead for another, and the third sector set to peak soon before softening over the next decade.
The stagnant forecasts are the cumulative effect of international concerns – economic woes of the Eurozone plus slowing growth in China, India and Brazil - moderating the growth expectations for Australia. Add to this a changing Australian economy and demographic, and the demand for building and construction is undergoing a sizable and structural shift.
“The ACIF Forecasts show that there is significant variability for our industry, depending upon work type and location,” said Peter Barda, Executive Director of ACIF.
“Many of the cycles of the past are gone. There is a new ‘normal’, and for many, it will be poor in comparison to previous buoyant times. Businesses need to plan carefully using good quality information to find their new playing field.”
Pressures of a growing population with changing demographics are behind a revival for flagging residential building in most states.
Significant housing shortages, estimated by National Housing Supply Council at more than 210,000 dwellings, will finally gain some relief over the next five years, however the pain and the joy continue to be spread unevenly.
Residential building in New South Wales has been weak over the past 10 years and will enjoy some relief in 2012-13 with an expected $17 billion in residential work, with good news also for Western Australia and Queensland. New work will be mainly in units and townhouses as higher density living continues to grow in popularity.
The boom in Victoria is at an end, and overall demand in that market is retreating, and a similar lowering of demand will be experienced in all other states.
Businesses focussed on non-residential building won’t find much joy in the Forecasts. Demand for building and refurbishment of offices, schools, retail, health and industrial building remains flat as clients delay and cancel projects, in part due to credit pressures. The Federal Government’s Building the Education Revolution (BER) provided a much needed uplift however as this ends in 2013-14, the sector will experience a decline in real terms unless work can be found to pull in out of the GFC-inspired slump.
The ACIF Forecasts indicate that engineering construction will reach a peak in 2014 at $120 billion per year as construction for the resources sector tapers off. Global uncertainties over demand for minerals has seen some major projects put on hold, while a surprisingly high level of work remains in water and sewerage. Thanks to initiatives such as the Carbon Price Mechanism, National Broadband Network and the Renewable Energy Target scheme, this sector will continue to be the most productive industry sector for the next seven years.
The changing demand patterns and work types in the industry will have a large effect on construction industry employment, with declining requirements for high skilled workers over the forecast period, with growing needs for tradespeople and low skilled workers. The type of work available, with the majority being regional engineering construction rather than urban residential and non-residential building, has seen a reduction in the number of apprenticeships available, which will have long term impacts on the skills of the industry – a major concern.
ACIF says its forecasts are reliable, highly accurate and credible source of business intelligence for the building and construction industry.
An important industry resource, local updates are being released at ACIF Briefings from 4 to 12 October in six cities, see www.acif.com.au/events for more information.
After 30 October, the ACIF Forecasts will become available at www.acif.com.au, including tools to generate customised forecasts of demand by work type and location.
