Master Builders Australia (MBA) has released an update to its forecasts for the building and construction industry out to 2026.
In the post-pandemic economic environment of interest rate rises, surging inflation, and unemployment at a 50-year low, the latest forecasts indicate that activity is still likely to expand modestly over the medium term despite the effect of short-term challenges.
However, there will be considerable variation in the pattern of growth by subsector.
Even though about 200,000 new homes need to be built each year to accommodate long-term population growth, MBA said activity will fall significantly short of this until 2026.
MBA CEO, Denita Wawn, said activity on the medium-high density side of the market is likely to be particularly slow.
“While pandemic conditions brought forward some residential building demand, the current economic conditions of interest rates hikes, inflation increases, and continued shortage of workers and materials, are significantly contributing to the decline,” she said.
Long-term supply constraints continue to hamper residential building, with MBA supporting the decision by the federal government to establish the Housing Supply Council in conjunction with state and territory governments.
“Our members continue to be frustrated with lengthy delays in approvals for land title, building applications, and occupation certificates. 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,” Wawn said.
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.
Civil and engineering construction is 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.