Construction expenditure to remain high

Construction expenditure to remain highAustralia-wide construction expenditure will remain at levels much higher than the historical average, according to the Australian Construction Industry Forum’s ‘Australian Construction Market Report’ for December 2014.The Australian Construction Industry Forum (ACIF) report, which provides rolling 10-year forecasts of demand across residential and non-residential building and engineering construction, states that engineering construction activity faces an unavoidable decline in the medium term, but that Australia-wide construction expenditure will continue to remain at elevated levels relative to the long-term average.In the construction industry, total spending in 2013-14 was $233 billion, which was $4 billion lower than the previous report in May foreshadowed. The outlook for 2014-15 remains much the same at $228 billion.However, the report indicates that the mix of construction work has changed, particularly in the residential sector.According to Peter Barda, executive director of ACIF, “Residential building is already spending to meet a backlog of pent-up demand arising from historically low interest rates and increased foreign demand. This is expected to lift total spending by nearly 17 per cent, to just under $90 billion by 2017-18, from $75 billion in 2013-14.”In relation to non-residential spending, there was improvement from 2012-13, when $33.6 billion was recorded, to $35.2 billion in 2013-14. The report forecasts non-residential spending will remain constant in the medium term before increasing in the outer years of the projection period to approximately $37 billion.Health and aged care is forecast to become an increasingly important sub-sector of non-residential building activity as the population ages.Engineering construction spending fell to $123 billion in 2013-14 after peaking in 2012-13 at $128 billion. Activity in this sector is expected to fall to about $92.5 billion by 2017-18.In terms of total construction activity, NSW is expected to overtake Queensland as the state with the most construction activity by 2016-17. As forecast in the May report, Victoria and WA are already showing signs of subdued activity.ACIF forecasts are published twice a year in May and December.For more on the latest report visit: http://www.acif.com.au/documents/item/660