Slightly improved outlook for construction sector: ACIF

LATEST data from leading industry forecasters reveals some positive news for the building and construction sector in Australia, with the nation's relatively strong economy set to result in overall activity levels improving over the medium and long term, according to the Australian Construction Industry Forum (ACIF).

The upcoming release of industry forecasts next month by ACIF are expected to reveal a slightly improving overall outlook for the industry. However, the biannual release of the forecasts will also show that the outlook varies by sector, state and capital, affecting businesses differently across the country.

According to ACIF, residential building is staggered but beginning to recover, driven by demographic trends, the existing housing shortfall and low interest rates. Non-residential building is relatively flat in real terms, but is improving over previous forecasts.

Engineering construction will remain at a relatively high level, ACIF said, although mining construction is at a peak and well publicised project deferrals are flattening activity peaks.

"The 'new normal' featured in the 2012 ACIF Forecasts continues, with changes to the mix of work available for all trades and professions," said Peter Barda, ACIF Executive Director.

"The breakdown of work by state also varies highly, with some states showing a relatively good outlook, after the next 12 months. For example, there is less 'traditional' work in office and retail development, but more in mining and engineering construction. And one state in particular will enjoy a modest recovery in residential building, at last," Mr Barda said.

ACIF released limited details of the outlook for each state, shown below, which highlights the variations in expected activity levels between the states.

New South Wales

Residential activity is finally coming good in NSW, but commercial building looks to stay flat at best. Conventional wisdom has it that only Barangaroo will make a dent in the down trend of the last three years. Is that all there is? What about industrial and a return to investment in retail?


The apartment surge of the last decade lifted activity in Victoria above NSW. It looks to have petered out, and there is no mining boom in Victoria to replace it. But what about other infrastructure projects? Are Melbourne office markets likely to see a return to new investment, or major refurbishment?


With CSG and other resource projects slowing are there signs of other activity to replace the peak turnover of the last five years? What about tourism and committed health projects? What impact will Government asset sales have on demand for new office stock? Will the disbanding of Project Services have an effect on demand for private designers and constructors?

Western Australia

Browse may be on hold, but there are still many projects on foot and committed. Mining related engineering is set to hold around $40 billion worth of projects. Can we expect more from residential activity as interest rates stay low?

South Australia

Olympic dam may be on hold but the SA economy seems to be remarkably resilient. Can low interest rates stimulate more spending on new housing, or are people spending on refurbishment of existing dwellings?


Government spending particularly on roads is holding up activity levels, but the private sector still looks unlikely to do much. With low interest rates can residential building deliver more work to the residential and commercial building sector?

ACIF Forecasts are rolling ten year forecasts of demand across residential, non-residential and engineering construction in Australia. The May release will be ACIF's 23rd biannual forecast release since the industry initiative began in 2002.

The updated ACIF Forecasts will be released at ACIF Briefings held 7-17 May 2013 in six cities, with detailed commentary and data for all sectors to be published in ACIF Construction Market Reports for each state.

More information is available from the Australian Construction Industry Forum (ACIF) website at <>.

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