The Royal Institution of Chartered Surveyors (RICS) Construction Monitor Q1 2023 data for Australia portrayed a weaker picture than the previous quarter with cost increases, skills shortage and energy costs cited by respondents as the key components holding back the sector.
The Construction Activity Index (which is a metric used to track changes in construction activity compared with one month previously) has slowed a little this quarter, easing from a +28 net balance to +20 but remains positive nonetheless.
Looking across to construction activity across the country, while most sectors are still strongly positive both residential and non-residential workloads have declined in terms of net balance, with residential activity falling from +13 to 0 and non-residential slipping slightly from +26 to +24.
Infrastructure works also declined from a reading of +64 to +52. This means the pace of construction growth is slowing.
Survey respondents’ comments alluded to the increasing cost of materials, skills shortages and rising energy costs, as well as inflation and the collapse of some construction companies as being detrimental to the sector.
An increase in transport, shipping and insurance premium costs were also mentioned.
Opinion on skills shortages remained similar to the previous quarter’s results with 75 per cent of respondents citing a shortage in quantity surveyors and 85 per cent citing a shortage in skilled tradespeople. However, looking ahead 12-month expectations remain strong.
Mel Rohan, RICS Senior Public Affairs Officer for Australia, commented:
“Construction in Australia remains strong with the Construction Activity Index easing back slightly but remaining in positive territory at +20 for Q1 2023 from +28 for Q4 2022 with expected headcount requirements over the next 3 and 12 months remaining positive.
“Key issues identified by respondents in Australia include interest rates, inflation, the lack of skilled resources, labour and material costs and supply chain issues”.v