Protect Your Finances – Another Rate rise! 11th rate rise in 12 months

In a recent Published report by GlobalData and MBA we report also on the following points

The Australian construction industry is expected to contract by 2.6% in real terms in 2023 due to several headwinds, including inflation, rising interest rates, supply chain disruptions, labor shortages, and a fall in new building permits.

The weakness in the country’s residential construction sector is also expected to impact the industry’s growth in 2023. These factors are causing several construction companies in Australia to struggle, with over 1,200 companies in the sector going into liquidation, receivership, or administration since July 2022. However, the industry is expected to record an average annual growth of 3.1% from 2024 to 2027, supported by the government’s focus on infrastructure development.

The government’s federal budget for FY2022-23 includes an allocation of AUD9.6 billion for vital infrastructure projects across the country, with over AUD120 billion allocated for transport infrastructure projects over the next 10 years. In addition, there are 423 resource and energy projects in the pipeline, with 118 projects worth AUD224-267.3 billion in the publicly announced stage, 192 projects worth AUD251.5-340.8 billion in the feasibility stage, and 83 projects worth AUD83.1 billion in the committed stage. These projects are expected to provide significant support to the construction industry in the future.

The Australian construction market is segmented into commercial construction, industrial construction, infrastructure construction, energy & utilities construction, institutional construction, and residential construction. Residential construction was the largest sector in Australia’s construction industry in 2021. The residential construction sector’s output is expected to be driven by significant funding for the housing sector, while the energy & utilities construction sector will be supported by investment in renewable energy projects. The infrastructure sector’s output will be supported by the government’s focus on infrastructure development, while institutional construction will be supported by investment in health, education, and research projects. The commercial construction sector’s growth will be supported by the government’s focus on reviving the tourism sector, and the industrial construction sector will be supported by improvement in mining, manufacturing, and export activities.

The Australian construction market can be divided into several key sectors, including commercial construction, industrial construction, infrastructure construction, energy and utilities construction, institutional construction, and residential construction. The largest of these sectors in 2021 was residential construction.

Residential construction is expected to see a significant increase in output over the forecast period, largely due to generous funding for housing initiatives in recent budgets. Additionally, government programs aimed at boosting residential demand are expected to further fuel construction output.

The energy and utilities construction sector is also expected to see an increase in output over the forecast period, driven by investment in renewable energy projects in line with the government’s target of achieving an 82% share of renewable energy in the country’s total electricity mix by 2030, as well as cutting carbon emissions by 43% compared to 2005 levels by 2030.

Infrastructure construction is expected to see growth over the forecast period as well, supported by the government’s focus on developing infrastructure to drive economic growth.

Investment in health, education, and research projects is expected to drive growth in the institutional construction sector, with Australia’s aging population also expected to contribute to long-term expenditure on healthcare buildings.

Finally, commercial construction is expected to see growth in the initial part of the forecast period, as the government focuses on reviving the tourism sector, providing a boost to the commercial sector’s output.