Double Dip Downturn in the Australian Construction Market


12 May 2017

ACIF: The latest industry forecasts released today by Australian Construction Industry Forum (ACIF), the peak consultative body for building and construction, show this important industry for employment is moving quickly through two peaks in activity with a less fevered period of activity coming.

The ACIF Forecasts for May 2017 show that Engineering Construction is midway through a sharp downslide. Demand in the sector, that includes mining-related construction, plus roads, rail and other large infrastructure is coming off a record-breaking peak driven by the mining development boom to take second position behind Residential Building. Residential Building is in the middle of its own boom. This has pushed growth beyond the housing fundamentals and a downturn is on its way.

“Synchronisation of the dominant cycles in the construction market is clear when you look at the change in work done,” said Kerry Barwise, Head Forecaster for ACIF.

“Growth in Engineering Construction spiked in 2012-13, about the same time that Residential Building bottomed out. The ACIF Forecasts for May 2017 show growth in Residential Building will peak this year (2016-17), close to the time when Engineering Construction is reaching is lowest point in contraction.”

There is still a lot of work in hand in most sectors of the Australian construction market.

The Engineering Construction sector is still going strong, and in 2016-17 is forecast to turnover close to $80 billion. There are still a number of large Infrastructure projects that are under development such as the development of the NBN or where plans are reaching an advanced stage including major road projects and new tramways/light rail projects.

The boom in Residential Building will lift the value of work done to $100 billion over this year, completing 220,000 homes, the largest number on record.

Non-Residential Building activity declined in 2015-16 to arrive at $36 billion in line with economic statistics showing soft non-mining business investment. Soft business investment conditions are expected to carry over into a further decline in Non-Residential Building activity in 2016-17 and 2017-18. In practice, Non-Residential Building activity is made up of a broad mix of activities and the drivers of investment differ by sub-category and the outlook for each sub-sector, including those of Offices, Education and Retail/Wholesale Trade, need to be considered carefully.

“The Federal Budget clearly has put infrastructure spending as a key priority. As the ACIF Forecasts show, the engineering sector continues to decline from the record highs of the mining boom and residential building is close to peaking,” said Adrian Harrington, Chair of ACIF’s Construction Forecasting Council which oversees the production of the ACIF Forecasts.

“The Federal Government clearly recognises that quality infrastructure is critical to ensure our cities and regions continue to grow and the significant role the construction sector plays in driving employment and productivity growth.

"As an industry not-for-profit, ACIF produces this information to assist businesses and governments at all three levels navigate the rapidly changing marketplace and help them plan for the future."

The Australian Government Budget 2017-18 is likely to assist in moderating the dual cycles that are bearing down on
building and construction activity. Measures such as the establishment of the National Housing Finance and Investment Corporation and the First Home Super Saving Scheme are expected to support more affordable housing provision cutting in right when the ACIF forecasts view that Residential Building will need some uplift. The $75 billion funding commitment in infrastructure investment over the 10 years to 2027 will be spread over all of the states and over the key infrastructure
categories. Some of the activities mentioned in the budget are already listed in the ACIF Major Projects database. It is
too early to say where the Budget measures are adding to forecast construction amounts, or adding certainty and funding to projects that have already been included in the May 2017 ACIF Forecasts.

The ACIF Forecasts are available from Australian Construction Industry Forum from today. Available in two formats: Australian Construction Market Report, an 80+ page expert analysis on the economy and industry sectors, plus the Customised Forecasts Dashboard, an online portal where users can query the full ACIF Forecasts database on 20 work types, over a twenty year period.




Source:  Australian Construction Industry Forum -

Contact:  Pia Argiratos, Marketing Manager, acif | Mobile: 0405 144 314

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