Industry groups are hopeful the tide has turned for blown-out construction costs and project timelines as the sector continues to grow.
A new survey by Aussie equipment hire company Kennards Hire has revealed that hundreds of business leaders across the construction sector are confident the industry is back on its feet after an initially rocky post-pandemic recovery.
Out of the 410 businesses involved in the survey, ranging from smaller operations with 20 employees to larger behemoth builders, 93 per cent said the industry was “stable” and ready to tackle the sizable project pipeline head-on without widely impacting costs.
The results are a sizable 12 per cent increase when compared to the same survey in 2022 when market shortages saw costs fluctuating wildly on a month-by-month basis.
But that initial skepticism in the wake of Covid might actually be responsible for today’s confidence in construction, with tradies pointing to their successful cost-cutting measures as the reason behind their belief in the industry.
According to the survey, 37 per cent of business successfully cracked down on the quality of their workmanship to reduce rework over the last two years, and 57 per cent adopted new tech to help tackle the piling administrative workload.
With cost-cutting measures now already in place for a lot of business and investment flooding in across the country, Kennards General Manager Tony Symons said the renewed confidence came as no surprise.
“Investment into the construction industry is booming like never before,” he said.
“We are currently seeing unprecedented levels of construction activity in every state in Australia, and this work is expected to continue for at least the next three years.”
Up on the docket for construction until the end of the decade are massive undertakings like Brisbane Olympic Game infrastructure builds, the $3.5 billion Housing Accords initiative and several green energy projects to help the nation ween off its supply of fossil fuels – all of which will keep tradies busy for years to come.
Not out of the woods yet
While business leaders might be optimistic the worst is in the rearview mirror, it still won’t be smooth sailing for construction projects heading into 2025.
Similar to 2023, business leaders said that the rising cost of materials (41 per cent), skilled labour shortages (38 per cent) and rising equipment costs (36 per cent) were set to put a dent in productivity over the next year.
One in three businesses also said they would be keeping a close eye on possible interest rate rises, with any steep increase potentially jeopardising the industry’s stability over the next five years.
With the Reserve Bank of Australia (RBA) set to meet in August to discuss quashing the stubborn inflation rate and rising Consumer Price Index (CPI) figures, officials warn that a rate rise is definitely on the cards.
“We’re at a really complex part of the cycle at the moment,” said Governor Michele Bullock in a press conference following the RBA’s decision in June.
“There’s been limited information about services inflation since the May board meeting, and this is where the most recent strength has been coming from.
According to Governor Bullock, the way ahead for won’t be clear until more comprehensive inflation readings become available on July 31st – so builders will just have to wait and see which way to wind blows.
“We still think we’re on the narrow path, [but] it does appear to be getting a bit narrower,” added Bullock.
“The board is not ruling anything in or out,”
