Construction Industry Trends for 2017


Since late 2013, residential construction, and particularly, apartment construction, has been a major contributor to the Australian economy. With record numbers of dwellings approved and commenced during 2015, there was a major concern that a housing bubble was being created. The response was that lenders began to place tighter controls on their lending practices causing a slowdown in 2016 of residential building.

Commercial construction was also on an upswing as a result of the revenue coming internally from mining and externally from Asian investors. As we enter 2017, there is a question about if Australia has sidestepped the bubble. And as mining industry revenue has declined significantly and those states where mining is prevalent have had to moderate their financial expectations, the economy looks for economic drivers to keep its construction industry growing at a good pace.

As market uncertainty prevails, construction companies and developers are being challenged in Australia to find ways to cut costs and improve their ability to plan, and design construction projects. This has caused them to turn to new tech.

One new technology is delivered by aerial photography specialists who employ drones to perform inspections of construction sites, so builders can perform pre-construction simulations, and test various hypotheses and designs which lower the risk of error, before breaking ground. Drones are ideal for this job, because they have very advanced lenses that can capture detailed, close up images, and send data in real time to computer systems which can react in real time to the data received. And they are able to do these jobs remotely and unmanned. Use of new technologies like drones will become more prevalent in 2017 and beyond.

Here is a look at the projections for the Australian construction market in 2017:

  • Total construction projects are projected to grow modestly at 2.9% in 2016/2107. This tepid growth compares unfavorably with the 18.5% growth experienced in 2015/2016.
  • Building construction fared well in 2015/2016 with a year on year increase of 38.1%. This sharp growth is in some ways deceptive because it is bolstered by the start of a number of large construction projects late in the year. Growth in building appears to have peaked in 2015/2016 and although the industry continues to have a high rate of building activity, there is a decline expected in 2016/2017.
  • Infrastructure, transport and utilities construction declined in 2015/2016 as it had for several years previously, and with the current government placing an emphasis on these types of projects, there is a projection for growth in civil engineering construction.

The NSW construction market has boomed over the last two years and looks to continue, as foreign developers/investors from East Asia continue to pour money into large-scale, mixed-use developments and commercial projects. This has supported residential construction hitting near record highs and as a shortage remains in Sydney’s rental apartment availability apartment construction growth is expected to continue. Additionally, infrastructure construction (supported by large committed state investment investment) is expected to show a jump in growth.

The Victoria property market is currently solid and growing but not at levels of 2015/2016. With only a few large commercial construction projects set to come on line in 2017, the outlook for commercial construction is not as bright, but it should be steady and the outlook for the next five years is definitely improving.

All other areas of the country are expected to see slight or significant construction declines primarily due to the fall in mining.