New building and construction industry forecasts released today chart the passing of two booms – in mining and residential – and the impact on this important sector of the Australian economy.
The May 2016 ACIF Forecasts reveal how the sector is coping with another double digit fall in engineering construction plus the impending peak of residential building.
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These were always going to be interesting times for our industry; once the resources boom had passed and residential building peaked. The release of the latest industry forecasts illuminate a turbulent next ten years, as the Australian economy recalibrates from an extraordinary peak, with some sectors set to experience a fall in work demand of up to 40% in the coming years.
“These ACIF Forecasts have been fascinating to produce, in an environment where interest rates are at record lows, global economic activity remains subdued and Australia is coming off the largest resource boom in its history,“ said Adrian Harrington, Head of Funds Management for Folkestone and Chair of ACIF’s Construction Forecasting Council.
“Now that the peak has passed, opportunities for the industry’s 1.1 million participants are simultaneously softening and relocating, however it is not all bad. The dynamics of business and public spending has seen some expenditure move between sectors, rather than fall away entirely, so the opportunity landscape has changed significantly. We are pleased to present the industry’s own forecasts for all sectors, to help businesses navigate this new environment.”
ACIF Forecasts November 2016
The November 2016 ACIF Forecasts project a 6% fall in overall building and construction activity from $220 billion in 2015-16 to $207 billion this year.
However, this mild decline is far from uniform, and the headline numbers mask the shifting demand within each of the three sectors. There is evidence that the surge in Residential Building, especially the construction of apartments, has saturated demand, or is about to. While Residential Building as a sector will continue to rise until 2017-18, from the following year, the sub sector featuring apartments and townhouses is forecast to begin a fall of up to 40%.
The previous lift in Non-Residential Building and Engineering Construction from the mining boom and related activities has now completed, however the sub-sectors have new public and private investment that makes the distribution of activity uneven within each sector.
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