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Medium-term construction growth but not before short-term pain: MBA

Short-term challenges to Australia’s construction industry won’t affect the medium-term growth, according to an updated forecast from Master Builders Australia (MBA).

The latest predictions, which were released by the industry body in late September, suggest overall construction activity is set to expand modestly over the medium turn, but not before challenges in the immediate future.

The post-pandemic environment, which has been hindered by interest rate rises, inflation, supply chain restrains, and unemployment – which has hit a 50-year low – presents the biggest challenges for the short-term future of the industry.

MBA suggests around 200,000 homes are required to be built each year in order to accommodate the long-term population growth in Australia, however figures indicate activity will not meet that level until at least 2026.

Across the country, the total amount of new dwelling constructed will fall by -16.4 per cent in 2022, and a further -1.3 per cent in 2023 and -7.7 per cent in 2024 before the tide is expected to shift toward the middle of the decade.

MBA chief executive Denita Wawn says the lack of residential activity is mainly due to the pandemic-induced constraints.

Wawn however, did praise the Federal Government’s decision to establish the Housing Supply Council in conjunction with State and Territory Governments to help alleviate residential building activity.

“While pandemic conditions brought forward some residential building demand, the current economic conditions of interest rates hikes, inflation increases, and continued shortage of workers and materials, are significantly contributing to the decline,” says Wawn.

“Our members continue to be frustrated with lengthy delays in approvals for land title, building applications, and occupation certificates. Shortage of land in the right places, high developer charges, and inflexible planning laws also restrict opportunities to meet the housing needs of our future.  These long-term supply challenges are the responsibility of State and Territory Governments.”

Elsewhere, the forecast for non-residential building activity for infrastructure such as social, cultural, retail, commercial and warehousing, will decline slightly in 2023 before increasing from 2024 onwards.

By 2026, total engineering and civil construction activity is expected to rise by 6.1 per cent, and non-residential activity to rise by 4.6 per cent.

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