Australia & New Zealand combined will see 1.4% to 2.1% GDP growth in the 1st Q of 2024):
Australia’s construction industry is projected to decline by 1.5% to 3% in 2024 from 2023 spending levels due to restrained operating companies future 2024 CAPEX plans and lower consumer spending, together with a higher cost of living than the previous year. The housing / residential sector is forecast to have a testing year in 2024.
. There is severe shortage of skilled construction workers, this includes welders, masons, carpenters and a number of other trades. It appears that a lot of baby boomers are retiring and young workers are not attracted to the construction sector. Australia’s construction related inflation rate is between 3.3% and 4.5%. Construction is one of the top 5 industries in Australia and represents approximately 10% of the country’s annual GDP, value of construction work each year is in the $150 to $200 billion range, the industry employs between 1 and 1.25 million individuals.
Australia’s economic relationship with China has seriously cooled down in the last 24 months, this issue is related to China’s South China Sea territorial claims that Australia is criticizing. This dispute will impact Australian mineral exports and could impact future mining related projects. The recently announced AUKUS nuclear submarine deal has upset China. While it’s early days for AUKUS program, the pact will bring a number of key technological benefits to Australia.
The New Zealand construction sector continues to face head winds, a number a major construction companies have gone out of business in the last 12 months. A shortage of skilled workers remain a problem. New Zealand’s construction inflation rate is between 4.5% and 5.3% that of course impacts construction costs. The housing / residential construction sector is forecast to have a challenging year in 2024.
Overseas – ocean freight costs have started to trend downwards, the importation of construction materials and capital goods into both Australia and New Zealand is a significant cost item to both countries.