Australia’s construction industry is showing resilience and solid confidence entering the second half of 2025, according to the latest RICS Global Construction Monitor.
Despite mounting pressures from persistent labour shortages, rising costs, and squeezed profitability, overall sentiment held firm in the June quarter.
The Royal Institution of Chartered Surveyors (RICS) reported that the national Construction Sentiment Index (CSI) for Q2 2025 came in at +9, a gain on the previous quarter’s +8, signalling ongoing optimism across the sector.
Workload trends were mixed. Private residential activity eased back, falling from a strong +12 in Q1 to +5 in Q2.
Private non-residential construction remained subdued at -8, while infrastructure and public works inched upward from +2 to +4, continuing their positive trajectory.
Across subsectors, infrastructure remained a key driver. ICT projects rose further to +17, while energy developments saw the strongest confidence at +27.
Water and waste projects posted +6, while transport and social infrastructure remained steady in positive territory. By contrast, agribusiness projects continued to contract, slipping to -19.
Looking ahead, expectations for the next 12 months are upbeat across all main segments.
Private non-residential construction is projected to accelerate, strengthening to +18, while both private residential and infrastructure/public works workloads are forecast to climb by +27 and +28 respectively.
The report highlights ongoing workforce challenges, with severe shortages of skilled tradespeople (+61), quantity surveyors (+57), and construction managers (+50), cited as significant obstacles to industry growth.
The strain on labour capacity remains one of the biggest risks for the sector, though potential future reforms from the federal Productivity Commission are expected to address these concerns.
On the financial front, sector participants see conditions improving.
Respondents anticipate an easing in credit constraints both over the next three months and across the next year, offering some relief to developers and contractors.
Vishant Narayan FRICS, member of the RICS Australasia Regional Advisory Board, said the latest results confirmed both confidence and challenges in equal measure.
“This quarter’s Construction Sentiment Index shows encouraging signs of strength across Australia’s construction sector,” said Narayan.
“Yet, the relentless demand for housing and infrastructure continues to place extraordinary pressure on the industry.”
Narayan stressed that the industry cannot afford to ignore current pressures, emphasising that productivity reforms will be key to overcoming structural challenges, especially addressing critical workforce shortages.
He added that developing a stronger and more adaptable pool of talent will be fundamental to securing the long-term health of Australia’s construction sector.
With investment pipelines strengthening and infrastructure leading the way, the outlook for Australian construction remains positive.
However, RICS warns that unless the skills gap is urgently addressed, the sector’s ability to keep pace with demand could be increasingly constrained.
