The Australian construction industry, which contracted an estimated 2.8% in real terms in 2018, is expected to regain growth momentum and rise at a compound annual growth rate (CAGR) of 2.73% during the forecast period (2019–2023), supported by the government’s focus on development of transport and commercial infrastructure in the country, says GlobalData, a leading data and analytics company.
GlobalData’s report, ‘Construction in Australia – Key Trends and Opportunities by State and Territory to 2023’ reveals that the industry’s output value in real terms is expected to increase from US$166.7bn in 2018 to US$190.7bn in 2023, measured at constant 2017 US dollar exchange rates.
Australia’s construction industry declined from US$171.5bn in 2017 to US$166.7bn in 2018 due to a sharp drop in activity in the oil and gas sector as major oil and gas projects, which provided a spurt to the industry’s growth in 2017, were completed or are close to being completed. These included the multi-billion Gorgon project and the Wheatstone and the Ichthys Liquefied Natural Gas (LNG) projects.
Dhananjay Sharma, Construction Analyst at GlobalData, comments: “Australia’s construction industry is expected to recover and expand over the forecast period, driven by investments in transport infrastructure.”
Residential construction was the largest market in the Australian construction industry during the review period, accounting for 35.4% of its total value in 2018. However, the market is currently in decline, owing to an oversupply in major cities. According to the Australian Bureau of Statistics (ABS), the total number of dwelling units approved in the country decreased by 5.6% in 2018.
Sharma concludes: “Uncertainties with regard to monetary and wages policies, as well as political instabilities due to the upcoming federal election in May 2019 are expected to hold back the growth of the residential construction market in the near term. However, with the government planning to invest A$75bn (US$58.9bn) to develop the country’s transport infrastructure by 2027–2028, the sector is expected to regain growth momentum. Commercial and industrial projects, and an improvement in consumer and investor confidence, will also provide support to the sector.”