Master Builders Australia has released an update to its forecasts for the building and construction industry out to 2026.
Despite the effect of short-term challenges, such as interest rate rises and inflation, Master Builders Australia forecasts that activity in the construction industry is likely to expand steadily over the medium term – although there will be considerable variation in the pattern of growth by subsector (civil and engineering, non-residential, and residential construction).
According to the update, the outlook for non-residential building activity (social, cultural, retail, commercial and warehousing) is reasonable with a small decline in 2023 but steady increase from 2024 to 2026.
“Master Builders remains concerned about the potential impact of unfavourable changes to the industrial relations framework for non-residential activity,” said Master Builders Australia Chief Executive, Denita Wawn.
“Changes already made and intended are likely to mean higher costs and lengthier rollout times. Were it not for these changes, the forecast growth rates would be more substantial.”
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Civil and engineering construction is forecast likely to show the strongest performance of the three sectors of the industry and while a small decline is forecast for 2023, growth is forecast for 2024-26.
On the residential front, 200,000 new homes need to be built each year to accommodate long-term population growth. Australia is likely to fall significantly short of this until 2026 given current interest rates hikes, inflation increases, and continued shortage of workers and materials. Activity on the medium-high density side of the market is likely to be particularly slow.
“Our members continue to be frustrated with lengthy delays in approvals for land title, building applications, and occupation certificates,” said Mrs Wawn.
“Shortage of land in the right places, high developer charges, and inflexible planning laws also restrict opportunities to meet the housing needs of our future.”