Current trends affecting essential construction

For years, experts forecasting the growth of important sectors with the Australian economy have identified the construction industry as key.

Then COVID-19 happened.

Due to disruptions to global supply chains affecting access to materials and equipment (as well as lack of migrants and travellers to increase our labour numbers), the cost and completion times of projects have significantly increased over the past two years.

Despite these challenges, many credit the construction industry for keeping the Australian economy strong during these times.

Is the construction industry growing or declining?

The Australian Construction Industry Forum forecast, released August 2021, expects “building and construction to be a major contributor to growth and recovery, projecting a 6% increase to $256 billion, while infrastructure construction is set to grow by 7.5% in 2022.”

On the other hand, it’s foreseen that the home building sector will experience a decline in demand, due to the lack of immigration and travellers.

Chief economist at Housing Industry Association, Tim Reardon, says the “industry will start to be hit with the effects of two years without strong population growth, higher building costs and the end of the federal government’s HomeBuilder scheme.”

Some of this reduced need for new homes will be offset with the industry playing catch up on projects which were delayed for various reasons over the past two years.

Additionally, Professor Bill Randolph, from UNSW City Futures Research Centre, offers this advice: “Consider supporting large-scale social housing investments as it would provide them a good pipeline of work and assist with housing affordability.”

Counter to the home building sector reduction, the infrastructure and heavy project area are expected to grow, as we have seen with Westconnex and Sydney Metro. Continuing state and federal government funding for existing and new projects will be essential; with many factors hinging on the results from the recent federal election.

SHBC Member and CEO and Director at Barker Ryan Stewart, Andrea McDonald, acknowledges that record investment into road and rail projects, combined with strong residential activities, has meant the construction industry is booming.

“The pandemic has resulted in a major surge in regional areas which is providing more opportunities in these areas,” says Andrea. “We’ve noticed infrastructure projects are increasing in size and complexity. Therefore, new approaches are being adopted in order to ensure they are effectively delivered.”

Workers in high demand

Andrea notes there’s also a downside to the influx of projects in the construction industry, as it stretches the industry’s resources. “Both material and staff shortages are proving challenging across the sector meaning delays in project delivery and rising material prices.”

The lack of workers has proved to be a particularly significant challenge. At record high vacancy rates, not even the opening of borders is expected to fill the numbers needed in the short-term.

The lack of workers include:

• professionals, such as civil engineers and urban planners, and
• tradies, such as electricians and bricklayers.

Therefore, at this time it becomes even more important for employers to look after the wellbeing of their staff. This is key to ensure longevity and reliability of their most essential resource.

The other side of business

Since the Sydney Hills Business Chamber is all about building connections, we asked Andrea to share an unexpected or unusual benefit she’d experienced from networking.

“For me it would be gaining an appreciation of the work behind the scenes in organising the Parkes Elvis festival,” says Andrea. “Whilst visiting regional NSW I was lucky enough to learn the history of the festival and have dinner at the Gracelands Restaurant where it all started.”

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Join us at the upcoming Building and Construction Connection (Online) event on 8th July 2022, held online from 7.15am – 8.30am, to connect with potential supply chain contacts, hear from our guest speakers and stay abreast of developments in the industries. Stay tuned for the booking link.

Become a member of the Sydney Hills Business Chamber so you can be supported by other business owners, connect with referral sources, and explore opportunities for joint-ventures and collaborations.