MBA releases updated building and construction forecast report
Master Builders Australia (MBA) has released an update to its forecasts for the building and construction industry out to 2027-28.
The forecasts provide a deep dive into the current economic conditions of the industry, providing an activity projection over the next five years.
Master Builders Australia chief executive Denita Wawn says the building and construction industry is the canary in the economic coal mine and activity will be very dependent on the macroeconomic environment.
“Australia’s economy is navigating a challenging period. There is no denying millions of Australians and business owners are feeling the mounting pressure of rising costs of living. However, it is not all doom and gloom,” she says.
“There are good reasons for believing we are overcoming the worst of the challenges if government policies do not hamstring these efforts. Despite an economically volatile 2022-23, the industry has demonstrated its resilience with total construction activity across Australia.”
Denita says non-residential and civil construction sectors have been doing most of the heavy lifting with a 3.8% increase in the construction activity to $226.4 billion but highlights housing to be at the forefront of public debate this year with the common constraint being supply.
Whether be it social and community housing, rental properties to owner-occupiers, MBA forecasts home building activity to be currently declining following a 16.5% decrease in work that began on an estimate of 173,755 new homes during 2022-23 including a further 2.1% predicted decline in the starting of around 170,100 homes in the same period (well under the 200,000 needed per year to meet population growth).
Despite its current course, housing is eventually expected to bottom out, according to Denita. The forecast of new home starts will peak at just over 241,000 in 2026-27, returning housing to a more desirable investment market. In addition, the projected volume of new starts over the five-year period up to 2027-28 merely exceeds the one million home target under the Housing Accord.
Looking to the other side, Denita says 2023-24 is likely to be quite favourable for the non-residential and civil sectors due to work on transport and social infrastructure investment with building activity likely to hit a peak during 2023-24 when $54.27 billion worth of work is carried out, before then slowly declining again with activity to $51.01 billion in 2027-28.
She explains $103.17 billion worth of work is estimated to be carried out in the sector and forecasted activity peak at $124.33 billion during 2024-25, with resource and major transport infrastructure projects doing much of the lifting before activity lowering back down considerably to $106.42 billion in 2027-28.