The Australian Construction Industry Forum (ACIF) Forecasts released today have upgraded the outlook across the building and construction industries. The drivers of last year’s growth will carry over into a more robust growth of 5% in 2023-24. This is projected to raise work in the building and construction industry to $298 billion. There is sufficient momentum to drive further growth for a few more years, albeit at a less rapid pace. This will push work done by the industry to equal or exceed $300 billion over the next three years.

This optimistic outlook may come as a surprise to some. The industry has been grappling with a difficult economic environment. Rising inflation and high interest rates have placed a heavy burden on builders’ shoulders. Builders are also having to confront the impact of recent industrial relations changes at the same time as they are dealing with sustained labour shortages. While a sharp spike in inflation in materials’ prices has moderated, prices remain at elevated levels.

While there are areas that are struggling, there are also categories of building and construction activity where the industry still has a large backlog and pipeline of work in hand. While governments are trimming their spending — cutting and deferring projects — they are mid-way through many large-scale public infrastructure projects and programs that still have some way to go, sustaining work well into this year and next. Structural and policy change driving the transition to clean energy is already boosting construction work, and more is on the way.

Of course, there are many risks that could still upset these forecasts. Fiscal policy and monetary policy settings are pulling in opposite directions and major adjustments may be required. The next resources surge may not play out as expected. Not all of the risk is on the downside. Government initiatives to combat the housing crisis could mobilise a larger increase in housing supply and this may arrive sooner than expected in these forecasts.

The key area of softness is in Residential Building which has struggled under the weight of higher mortgage rates and the phase out of various subsidies. Approvals for new builds have been in decline for the last two years. The industry has been working through the substantial volume of work in the pipeline. The forecasts project that the decline will be carried forward into the next two years before a tentative return to growth from 2025-26.

Offsetting the decline in Residential Building, Engineering Construction particularly Infrastructure Construction activities, have boomed. This has been supported via a raft of large-scale public transport projects, and a tsunami wave of interest and project proposals in renewable or clean energy supply. The ramp up in work yet to be done has been very large over the last year and there is still upside risk to the 10% growth forecast for 2023-24.

In Heavy Industry including Mining a surge in interest in critical and strategic minerals and investment in clean energy supply is boosting activity, supported by ongoing development in Australia’s traditional mining activities, including iron ore and metallurgical coal. Work done is expected to surge rising by 17.8% in 2023-24. Growth will then taper off to between 2-3% well into the medium to longer term.

Non-Residential Building activity grew steadily over the last two years and has reached an historic high point. Growth in Non-Residential Building has offset some of the decline in Residential Building. The situation for this category reflects large movements in the sub-components, with strong growth (sometimes double-digit growth) in Education, Industrial, and Retail being offset by large contractions in Accommodation and Entertainment and Recreation. While still reflecting mixed performance in the subcomponents, continued overall growth is expected for the next two years, although this will taper off down to 1.2% by 2025-26.

Peter Downes, Director of Outlook Economics and Lead for the ACIF Forecasts, commented: “At the moment the construction industry is a study in contrasts. On the one hand residential construction is slowing, with high levels of bankruptcies with many builders struggling with fixed price contracts and material input costs rising by more than 30 per cent over the last two years. On the other hand, profitability in the sector overall is at high levels, with engineering construction booming. Construction will be key both to resolving the housing crisis, and the net zero transition. Residential building is forecast to recover from mid-2025 led by affordable housing and high density developments, with upside risks if the Government amps up its efforts to meet the 1.2 million new homes goal. Meanwhile both engineering construction and non-residential building will continue at high levels, with the mix of activity in both sectors changing. In non-residential building, the pattern of demand is shifting from offices and retail to hospitals, warehouses and logistics. In engineering construction, transport infrastructure investment will eventually decline from the current high levels, while the investment requirements for the net zero transition will continue to grow, with some upside risks for the second half of the decade if some of the very large projects in the renewable energy space come to fruition..”

Nerida Conisbee, Chair of ACIF’s Construction Forecasting Council, commented: “By the end of 2023, construction costs started to moderate but not fall, primarily because of material costs combined with labour prices. Other problems added to these, noting that building industry insolvencies are now at record high levels without any sign of them slowing down. Costs may no longer be rising at such a fast pace but it is getting very hard to find someone to build anything..”

Andrew Scott, Deputy Chair of ACIF’s Construction Forecasting Council, commented: “Recent industry feedback seems to suggest that, after being insulated for some time by backlogs, detached residential activity is beginning to soften. The protracted period of weak leading indicator data and the lack of an inflection point suggests that construction activity will decline further before an eventual rebound plays out..”

About the Australian Construction Industry Forum (ACIF)

The Australian Construction Industry Forum (ACIF) is the trusted voice of the Australian construction industry. ACIF facilitates and supports an active dialogue between key players in residential and non-residential building, and engineering construction, other industry groups, and government agencies. ACIF’s focus is on innovation, collaboration, equity and sustainability for the industry. ACIF Members are among the most significant associations in the industry, spanning the entire asset creation process from feasibility through design, cost planning, construction, building and management. ACIF harnesses the resources of its members to research and develop initiatives that benefit businesses of all sizes, from the largest of construction companies to small consultancies. More information on ACIF is available from

About the ACIF Forecasts

ACIF Forecasts are rolling ten-year forecasts of demand across residential, non-residential and engineering construction in Australia. The Forecasts are prepared by respected economic modellers, using high quality data sources, and are overseen by ACIF’s Construction Forecasting Council, an industry panel of expert analysts and researchers. ACIF Forecasts are used by thousands of professionals each year, from across the full range of stakeholders, from major organisations to small consultancies. ACIF Forecasts are available as the Australian Construction Market Report and detailed numbers are available by subscribing to the Customised Forecasts Dashboard.

The ACIF Forecasts are available from the Australian Construction Industry Forum from today. Available in two formats: Australian Construction Market Report, a 120-page expert analysis on the economy and industry sectors ($440), plus the Customised Forecasts Dashboard ($385), an online portal where users can query the full ACIF Forecasts database on 20 work types, over a twenty year period. As an industry not-for-profit, ACIF produces this information to assist businesses and governments at all three levels navigate the rapidly changing marketplace and help them plan for the future. Find out more at

For media comment please contact: Peter Downes 0407 232 017 or Nerida Conisbee 0439 395 102.

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