2014 has arrived, and the Australian economy continues to change. How will these changes affect the construction sector? What changes, if any, will these economic factors bring to the industry?
It seems inevitable that there will be change. However, based on projections, the overall outlook for 2014 in the construction industry is optimistic. Though there is always significant variation in construction spending across different sectors, sub-sectors, states or cities, it appears that - in particular - residential construction spending is expected to rise. This is due in part to low mortgage interest rates and an increase in affordable housing. Low interest rates might play a part in increased spending in non-residential construction spending as well.
Experts feel that mining construction will continue to fade in 2014. However, home building and mining exports are expected to proliferate in its place.
Here is a summary of new trends in the construction industry for 2014.
Mining Construction To Be Overtaken By Home Building And Mining Exports
Experts anticipate that home building and mining exports will begin to overshadow mining construction in 2014. Home prices are starting to rise, and consumer spending is expected to increase over the course of the year. In short, the global economic outlook for Australia is strong.
It's important to note that the Australian economic climate tends to change quickly. As already noted, the mining construction boom is expected to come to an end, with mining exports and construction taking its place. These changes are rather common in Australia.
The good news is that the construction industry is well-positioned to pick up the slack. Home construction seems like the most likely candidate.
Some of the main reasons for the demand of housing includes low mortgage interest rates, the affordability of homes, and an increase in dwelling starts.
Increase In Residential Construction Spending
Low interest rates and affordable housing are expected to encourage residential construction spending and housing starts in 2014. Meanwhile, the engineering construction boom is expected to diminish.
Most of the new work will be in new houses and additions or alterations. Though building in Victoria may cease for a while, there should be quite a bit of growth in Western Australia and Queensland.
Increase In Commercial Construction Spending
Spending in this area could vary quite a bit in the mid term depending on a variety of factors like economic conditions and the reduction of policy related spending in education and health.
Rise And Fall
Experts anticipate that though construction activity will see some tapering off in certain sectors, they believe it will be offset by an increase in other sectors.
All in all, the big picture seems to be positive. However, there is always considerable variation in construction spending in specific sub-sectors, states and cities. There are a variety of economic factors that could affect spending in construction.
However, overall, 2014 is shaping up to be a good year for the construction industry in Australia.