In Australia, construction activity is running comfortably warm with a market outlook that suggests markets will be increasing in activity over the coming years.

As in other regions, responses to COVID-19 have prompted optimism within the construction sector as governments have boosted spending. Expectations are significantly more positive more than a year ago and point to most markets warming. Although the nation was very effective at controlling COVID-19, the pandemic presented challenges for construction, creating delays, impeding productivity, and forcing workplace changes.

Encouragingly, productivity is at, or near to, pre-pandemic levels and in many markets output has bounced back. One of the biggest headaches remains a shortage of skilled labour in most sectors of the economy. Border restrictions have exacerbated problems, hitting the supply of overseas workers. The situation is expected to worsen. Meanwhile, as in many nations, concerns are growing over rising costs, uncertainty and a lack of confidence among private investors.

Australia has greater economic interest in carbon fuels and, compared with New Zealand, emits about double the carbon dioxide for each citizen. This makes achieving zero-carbon a far tougher task.

Future outlook

The region’s prospects look solid, particularly in sectors supported by public sector stimulus packages, and COVID-19 rates remain exceptionally low. But while current economic forecasts are positive, risks remain. The vaccination roll-out has been slow in the region compared with Europe or North America, and there is the inevitable spectre of interest rate rises correcting the house price boom given the level of economic uncertainty.

Progress of the environmental agenda

Australia has greater economic interest in carbon fuels and, compared with New Zealand, emits about double the carbon dioxide for each citizen. This makes achieving zero-carbon a far tougher task. Across that sub-region, projects with a high commitment to zero-carbon are relatively less common. However, the view is firmly that the proportion is set to rise.

Regional construction cost performance

Top three construction challenges