Australia is experiencing a “record high” construction activity across all sectors and states, according to Rider Levett Bucknall’s third-quarter construction report.
The amount of construction work underway across Australia during Q3 was unprecedented with “similar levels of activity” forecast for the next two to three years.
RLB said this building boom was being driven by:
- Federal and state government funding of major projects
- Projects starting late due to covid lockdowns
- Projects falling behind schedule due to abnormal weather conditions on the East Coast
Although, construction activity is at a record, construction costs have been rising at a rate not seen since 1986. Factors that have influenced the rising cost of construction are:
- Shortage of skilled workers
- Ukraine-Russia conflict
- Interruptions in the supply of materials that are sourced outside of the country
- Increase of interest rates worldwide
However, RLB expects that price pressures will decline in 2023, due to reduced economic output in the world’s major economies.
“This easing of demand should allow manufacturing and logistics to get back to ‘normality’. The easing of demand should also see a softening of material prices with the high levels of demand-led price premiums reducing due to lessening demand,” RLB said.
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