Q4 2023 Australia Report [Perth]: The Western Australian construction industry had a productive year with work complete increasing by 8.9% over the previous period completing just over $31bn.
The residential sector remained steady with a very slight 0.5% increase over the previous year, but that is anticipated to dip in the next year on the back of lower approval numbers. The non-residential sector also showed a strong increase of 9.4%. The engineering sector continues to be dominant accounting for approximately two thirds of the market. The engineering sector saw a 11.4% increase in work executed to $20.9bn.
It is anticipated the engineering sector will remain strong. While the non-residential sector may start at a slightly lower level of activity it has the potential to grow strongly on the back of government desire to increase social and affordable housing stock to address shortages. Overall, the anticipated work volume in Western Australia is expected to show a slight increase in the coming period.
The availability of well credentialed tier 1 and tier 2 contractors is low, and this may become a constraint and have an impact on pricing going forward.
The engineering sector continues to be the dominant sector in the Western Australian market.
Escalation insights
There are several influences on the continuing construction escalation with the major ones being underlying CPI and labour shortages.
Current CPI in Western Australia is 4.9% and with steady work volumes and labour shortages there is no likely prospect of significantly lower escalation.
Wage rates for construction sector workers remain under pressure partly driven by the high wages on offer within the resource sector.
Photo: Exchange at Curtin University, Perth
FURTHER INFORMATION:
