The Royal Institution of Chartered Surveyors (RICS) has released its latest Construction Monitor for Australia, revealing a mixed outlook for the construction sector as it approaches 2025.
The report, covering the third quarter of 2024, highlights ongoing challenges while also pointing to some positive trends in specific areas.
According to the RICS report, the Construction Sentiment Index remained stable at +2, down slightly from +10 in the previous quarter.
This marks the 16th consecutive quarter of positive sentiment, albeit at a lower level than earlier in the year.
Current workloads in private residential and non-residential construction sectors continued to show weakness, with negative readings of -5 and -13 respectively.
However, the infrastructure sector demonstrated resilience, with 14 per cent of respondents reporting healthy workloads.
Energy projects, water and waste management, and transportation were identified as the strongest performing sub-sectors.
Looking ahead, the outlook for the next 12 months appears more optimistic for certain areas.
Private residential construction and infrastructure are expected to perform well, with positive sentiment indicators of +20 and +29 respectively.
However, the private non-residential sector has dipped back into negative territory with a reading of -2, down from +15 in the previous quarter.
The report identifies several key factors hampering industry activity.
Skills shortages remain the most significant challenge, cited by 66 per cent of respondents.
Financial constraints and material costs follow closely behind, mentioned by 63 per cent and 57 per cent of participants respectively.
The most in-demand roles continue to be skilled trades and quantity surveyors.
Credit conditions across Australia have shown little improvement, with 23 per cent of respondents reporting no positive change, a slight improvement from 28 per cent in the previous quarter.
Kevin Brogan, FRICS and RICS Australasian Board Chair, commented on the findings, noting that the softening in Australian construction activity aligns with global trends.
He highlighted the continued move away from the highs experienced during the COVID-19 pandemic, reflecting slower economic growth and lower inflation in Australia overall.
Brogan also pointed out the ongoing skills shortages throughout Australia, with the country posting one of the highest rates of respondents reporting increased hiring of personnel from overseas.
On a positive note, he mentioned that 12-month expectations regarding credit conditions suggest they may become more favourable, potentially indicating a trend towards quantitative easing in Australia and globally.
As the Australian construction sector navigates these challenges and opportunities, industry stakeholders will be closely monitoring how these trends evolve in the coming months, particularly as the industry moves into 2025.
