Residential construction
2021 saw a recovery in residential construction work value, having witnessed a slump in the previous year. Residential house prices continued to increase across 2022, with larger cities, particularly Sydney and Melbourne, struggling with housing affordability issues. In terms of new housing supply, a high volume of new home construction was forecasted in the next five years in Sydney. Due to strong population growth, housing demand in Melbourne was also expected to remain high.Non-residential construction
In contrast to the residential building market, the value of construction in the non-residential segment has continued to grow. Investments have been focused on schools, hospitals, offices, warehouses, and hotels. Industrial and commercial construction in the non-residential segment rose in 2021, with the growing demand for warehouses attributed to an increasing number of data centers and e-commerce growth.Infrastructure construction
As of 2022, over 660 major public infrastructure projects were in the works across Australia, with the largest number of projects focusing on transport infrastructure. Australia placed among the leading 30 countries according to its quality of infrastructure in 2019. New South Wales, Victoria, and Queensland all have major infrastructure projects in the pipeline, covering transport, energy, water, and telecommunications sectors. Federal and state governments have had to increase infrastructure spending for these projects. Nonetheless, around 59 percent of Australians still believe infrastructure needs are not being met in Australia.Construction resource demand
In recent years, there has been a large escalation in construction material prices, particularly in terms of steel and timber products. In 2022, the producer price index of structural timber in Australia skyrocketed from 2021 values, as well as that of steel beams and sections. As of 2022, steel and concrete were in high demand in the major public infrastructure pipeline, as well as concrete and walls in the general infrastructure pipeline.Due to material shortages, rising costs, and supply chain disruptions, recycled material resource demand in Australia’s infrastructure industry has started to grow, with the hope that reclaimed materials could lessen industry reliance on conventional materials. Reclaimed asphalt pavement and recycled crushed glass are currently seen as having the largest replacement potential for conventional materials in Australia. Using recycled materials in infrastructure could be a game-changer in construction material affordability, by reducing business costs, increasing the efficiency of natural resource use, and moving towards a circular economic structure within the industry. Despite this, there is still a lot of resistance and uncertainty surrounding using replacement materials within the industry.
