Australia’s construction industry is set to regain momentum from 2020, thanks to a range of major infrastructure projects and programs, according to a new report.
GlobalData’s recent report, Construction in Australia – Key trends and opportunities by state and territory to 2023, found Australia’s construction industry is expected to remain weak in 2019, contracting by 2.4 per cent.
The company believes this is a result of a lull in activity in the construction of major energy projects, as well as a downturn in the residential sector.
GlobalData Construction Analyst, Danny Richards, said residential construction accounted for 36 per cent of the industry’s total value in 2018, but is likely to fall.
“The residential sector has been expanding rapidly in recent years, but the consequent oversupply of residential buildings as well as tighter lending conditions will hamper the sector in the coming years, and by 2023 it will account for less than 32 per cent of the industry’s total value,” he said.
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The total number of dwelling unites approved has also decreased by 22 per cent year-on-year in the first for months of 2019, according to the Australian Bureau of Statistics.
However, GlobalData expects the industry’s output value in real terms to rise at a compound annual growth rate of 2.14 per cent from 2019 to 2023, compared to -1.59 per cent during 2014 to 2018.
“Australia’s construction industry will regain growth momentum from 2020,” Richards said.
“The improvement will be driven by investments in transport infrastructure, with the government planning to invest US$58.9 billion to develop the country’s transport infrastructure by 2027–2028.
“Commercial and industrial projects and an improvement in consumer and investor confidence will also provide support, offsetting the downturn in residential construction.”