Master Builders Australia (MBA) has released an update to its forecast for the building and construction industry to 2026.
In the post-pandemic economic environment of rising interest rates, soaring inflation and unemployment at its lowest level in 50 years, the latest forecasts indicate that activity should still increase modestly in the medium term despite the effect of short-term challenges.
However, there will be considerable variations in the pattern of growth by sub-sector.
Even though about 200,000 new homes need to be built each year to cope with long-term population growth, MBA said activity will be significantly lower than that until 2026.
MBA CEO Denita Wawn said activity on the medium to high density side of the market is expected to be particularly slow.
“While pandemic conditions have pushed some demand for residential construction forward, the current economic conditions of rising interest rates, rising inflation, and continued shortages of workers and materials are contributing significantly to the decline,” she said.
Long-term supply constraints continue to hamper residential construction, with the MBA supporting the federal government’s decision to create the Housing Supply Council in conjunction with state and territory governments.
“Our members continue to be frustrated with the long delays in approval of land titles, building applications and certificates of occupancy. Scarcity of land in the right places, high developer charges and inflexible planning laws also limit opportunities to meet the housing needs of our future,” Wawn said.
The outlook for non-residential building activity (social, cultural, retail, commercial and warehousing) is reasonable with a slight decline in 2023 but a steady increase from 2024 to 2026.
Civil and engineering construction will likely show the best performance of the three industry sectors and, although a slight decline is expected for 2023, growth is expected for 2024-26.