Master Builders Australia has released their forecasts for the building industry into 2024, and the news isn't great.
While engineering construction work is set to expand 12.5 percent by 2021/22 - the largest rise in the sector since the mining investment boom in the early 2010s - the commercial and home sectors are likely to experience significant fluctuation over the five year period.
Low interest rates and a booming population has resulted in steady growth in commercial building over recent years, with an eight percent increase during 2018/19 compared to the 2017/18 period. That's expected to see another boost of 6.5 percent through 2019/20 before a drop propelled by factors including slow progress in government infrastructure work and changes to planning controls.
The result will be an 8.9 percent decrease in the commercial building project by the end of 2023/24 as compared to 2018/19.
"The segments to see the toughest conditions over the next few years include building for accommodation, offices and education. These are the parts of the market which generally performed best over recent years," says Shane Garrett, Master Builder Australia's chief economist.
He stresses that it is not all bad news though. Retail/wholesale, transport buildings and health facility segments are expected to see steady growth.
In home building, the situation stands in stunning contrast. Forecasts predict that while there is no immediate end in sight for the new home building slump, recovery is on the horizon.
The record high building rate of the last decade, led by a prominent increase in apartment and unit buildings, is coming to an end. And so is consumer confidence. That's the critical factor Master Builders envisages driving new home building commencements to a low of 167,444 in 2020/21 - a 28.3 percent drop from the 2015/16 peak.
"From there, we expect that the strong market fundamentals will drive new home building higher," says Garrett.
"By the end of our forecast horizon in 2023/24, new home starts are anticipated to recover to 187,658 an 11.9 percent increase on the low point of the cycle expected in 2020/21."
Where builders will see immediate growth is in home renovation work. The market is forecast to grow to $9.38 billion in 2023/24, a 4.6 percent increase on 2018/19.
All of Master Builders Australia's forecasts are available to purchase on the company's website.
Image: Bon Bahar, Unsplash