Forecasts for the residential construction sector, which has been in a boom with building supplies in North Sydney and across the country experiencing a corresponding upsurge, is predicted to hit a major snag by 2019, thanks to several reasons.
Whilst the residential sector will slow down, the commercial sector will hold the construction industry up, as it isn’t as sensitive to stringent lending conditions and the increasing costs of building supplies in North Sydney and across the country. The forecast for the commercial sector is expected to hit a total turnover of 12.6% in 2019, up from 8.4% in 2018.
According to forecasts from the Australian Industry Group and the Australian Constructors Association, the non-residential construction in the country is set to go up over the course of 2018-19, with total levels set to amount 17.3% of the country’s construction projects by 2019, with growth led by transport infrastructure.
Lindsay Le Compte, Executive Director of the Australian Constructions Association, says that sticking with the projected forward pipelines by the government would allow the industry to plan for the future with a level of comfort and security.
2019 is expected to see a drop of 16.6% in apartment developments, after the growth of the sector, currently supported by under development and in-planning projects, passes.
The AI Group, however, still expects gains for the industry as a whole for the rest of 2018 and into 2019. Their forecast says that, while multi-level apartments will slow down, the construction workforce and corporate activity will continue to grow, offsetting that. Though its experts say that there will be constraints on supplies, price hikes on building supplies in North Sydney and across the country, and companies and firms having difficulty getting skilled staff.
The Australian construction sector saw its growth slow to the lowest rates by June of 2018, according to the AI Group’s monthly construction index, which dropped to 50.6, the lowest it’s been in 17 months. The residential sectors slowed the industry’s momentum, though current conditions in the industry point to a mostly stable future overall; with the new developments stabilizing, with the commercial sector helping pull up the construction industry on the whole.