After enduring skyrocketing costs and persistent tradie shortages, Australia’s construction industry is gearing up for a comeback as experts remain ‘cautiously optimistic’ heading into 2025.
A recent report from BCI Central painted a mixed but improving picture for the sector heading into the new year, noting that the industry’s growth is expected to stabilise despite ongoing hurdles—like inflation, rising supply costs, and a 4.35 per cent cash rate.
Using insights from national project data and exclusive input from top developers, architects, and builders, the report found that Government spending and a noticeable uptick in early-stage project proposals in particular were shaping up as the bedrock for recovery.
Major players in NSW/ACT, Victoria, Queensland, and Western Australia were leading the charge, with significant investments pouring into residential, commercial, and energy projects.
But it was the energy and resources sector in particular that showed promising signs, with clear signs showing government-backed projects were gearing up to become a major driving force for industry growth moving forward.
The report revealed that works in NSW/ACT, Victoria, Queensland, and WA will account for three-quarters of the total project value during the forecast period from late 2024 to mid-2025.
Architects, meanwhile, are stepping up their game by embracing cutting-edge tools like Building Information Modelling (BIM) and virtual reality to streamline design processes and manage rising costs weighing down project commencements.
Developers are also showing signs of prioritising project feasibility and compliance with Environmental, Social, and Governance (ESG) standards, adopting measures that will bring down the initial costly upgrades in the long run.
Combine all that with the growing optimism that interest rates will be cut heading into mid-2025 and fewer project abandonments than the previous 2023-2024 period, and construction businesses finally look like they’re finally getting back on their feet.
“Australia’s construction industry enters 2025 with a sense of cautious optimism despite facing economic challenges,” the report highlights.
Still struggles ahead
But we’re not quite out of the woods yet. Despite improvements, builders are still grappling with significant hurdles, including subcontractor insolvencies, fluctuating material costs, and the ever-present challenge of finding and keeping skilled workers.
“Labour shortages, talent acquisition and staff retention were among the top challenges in 2024,” the report notes. “Subcontractor engagement is becoming a growing concern for builders.”
New technologies needed to cut costs were also proving to be a double-edged sword, as developers and architects struggled with pricey integration fees.
However, builders did say they felt “better prepared” for these transitions as many construction firms looked to upskill their workforce and expand into new sectors to make up the cash
