Surprising resilience of building and construction underpinned by infrastructure spending

31 May 2024

AMCA members receive complimentary access to ACIF's forecasts for May 2024, which have upgraded the outlook across the building and construction industry.


>> Download the Australian Construction Market Report - May 2024 <<

Access to these products is a benefit of AMCA membership – please do not share them outside your companies.

The boom in Engineering Construction, particularly Infrastructure Construction activities, has offset the decline in Residential Building, and underpinned a surprisingly positive outlook for the building and construction industry. This is the major theme of the Australian Construction Market Report (May 2024) published by the Australian Construction Industry Forum (ACIF).

The drivers of last year’s growth will carry over into a more robust growth of 5% in 2023-24. This is projected to raise work in the building and construction industry to $298 billion. There is sufficient momentum to drive further growth for a few more years, albeit at a less rapid pace. This will push work done by the industry to equal or exceed $300 billion over the next three years.

This optimistic outlook may come as a surprise to some. The industry has been grappling with a difficult economic environment. Rising inflation and high interest rates have placed a heavy burden on builders’ shoulders. Builders are also having to confront the impact of recent industrial relations changes at the same time as they are dealing with sustained labour shortages. While a sharp spike in inflation in materials prices has moderated, prices remain at elevated levels.

While there are areas that are struggling, there are also categories of building and construction activity where the industry still has a large backlog or pipeline of work in hand. While governments are trimming their spending -- cutting and deferring projects -- they are mid-way through many large-scale public infrastructure projects and programs that still have some way to go, sustaining work well into this year and next. Structural and policy change driving the transition to clean energy is already boosting construction work and more is on the way.

Of course, there are many risks that could still upset these forecasts. Fiscal policy and monetary policy settings are pulling in opposite directions and major adjustments may be required. The next resources surge may not play out as expected. Not all of the risk is on the downside. Government initiatives to combat the housing crisis could mobilise a larger increase in housing supply and this may arrive sooner than expected in these forecasts.

Offsetting the decline in Residential Building, Engineering Construction -- particularly Infrastructure Construction activities -- have boomed. This has been supported via a raft of large-scale public transport projects, and a tsunami wave of interest and project proposals in renewable or clean energy supply. The ramp up in work yet to be done has been very large over the last year and there is still upside risk to the 10% growth forecast for 2023-24.

Non-Residential Building activity grew steadily over the last two years and has reached an historic high point. Growth in Non-Residential Building has offset some of the decline in Residential Building. The situation for this category reflects large movements in the sub-components, with strong growth (sometimes double-digit growth) in Education, Industrial, and retail being offset by large contractions in Accommodation and Entertainment and Recreation. While still reflecting mixed performance in the subcomponents, continued overall growth is expected for the next two years, although this will taper off down to 1.2% by 2025-26.

Free access for AMCA members

AMCA members receive complimentary access to ACIF's Member Forecasts Program, which has two components:

Access to these products is a benefit of AMCA membership – please do not share them outside your companies.

>> Download the Australian Construction Market Report - May 2024 <<

>> Access the ACIF Customised Forecasts Dashboard <<

To access the dashboard:

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