CONSTRUCTION spending in the patchy residential sector will rebound in 2007-08, according to the Construction Forecasting Council.
However, the council's forecasts show that the residential recovery will not reverse the long-term trend of lower spending growth in the overall construction industry. Commenting on the latest forecast, which was released yesterday, Neil Marshall, chairman of the Australian Construction Industry Forum, said the outlook for residential construction spending had improved in the past six months. "When the CFC first released its residential forecasts six months ago, growth in construction spending was forecast to rise by 3.6 per cent a year, over five years, and 3.5 per cent over eight years." However, he said the CFC now forecast spending growth on residential construction would be 7.2 per cent a year, over five years, and 6.1 per cent over eight years. Economist Emily Brown, with the consulting firm Econtech which undertook the research, said the real value of work in the residential sector was forecast to remain weak in 2005-06 (minus 3 per cent) and 2006-07 (minus 1 per cent). Ms Brown said it would recover in 2007-08. The value of work was forecast to rise 13 per cent to $62billion - up $7billion from the 2006-07 financial year. By 2012-13, the value of residential construction was forecast to reach $75billion, against $19 billion for non-residential and $37 billion for the engineering sector. However the level of spending in the construction sector would gradually trend down over the next seven years when the average annual spending would fall below the average of the past seven years. The Construction Forecasting Council expects spending growth in the non-residential sector, which increased 5.8 per cent each year in the last seven years (1998-2005), to fall to 4.4 per cent annually over the next seven years. Spending growth on engineering projects had peaked at an annual growth of 9.5 per cent and was now forecast to grow at 4.8 per cent a year during the period. Ms Brown said in terms of value of work, all three sectors grew strongly, especially in the 2002-03 and 2003-04 financial years. In those two years, the engineering sector grew 20 per cent and 7 per cent; non-residential 11 per cent and 6 per cent and the residential sector 15 per cent and 4 per cent respectively. Spending in the engineering and non-residential sectors was forecast to outstrip the residential sector in the next two years. The Construction Industry Forum said spending growth would rise by 9.3 per cent and 4.6 per cent respectively in the next two years, against growth of 1 per cent in the residential sector.
Commenting on the latest forecast, which was released yesterday, Neil Marshall, chairman of the Australian Construction Industry Forum, said the outlook for residential construction spending had improved in the past six months.
"When the CFC first released its residential forecasts six months ago, growth in construction spending was forecast to rise by 3.6 per cent a year, over five years, and 3.5 per cent over eight years."
However, he said the CFC now forecast spending growth on residential construction would be 7.2 per cent a year, over five years, and 6.1 per cent over eight years.
Economist Emily Brown, with the consulting firm Econtech which undertook the research, said the real value of work in the residential sector was forecast to remain weak in 2005-06 (minus 3 per cent) and 2006-07 (minus 1 per cent).
Ms Brown said it would recover in 2007-08. The value of work was forecast to rise 13 per cent to $62billion - up $7billion from the 2006-07 financial year.
By 2012-13, the value of residential construction was forecast to reach $75billion, against $19 billion for non-residential and $37 billion for the engineering sector.
However the level of spending in the construction sector would gradually trend down over the next seven years when the average annual spending would fall below the average of the past seven years.
The Construction Forecasting Council expects spending growth in the non-residential sector, which increased 5.8 per cent each year in the last seven years (1998-2005), to fall to 4.4 per cent annually over the next seven years.
Spending growth on engineering projects had peaked at an annual growth of 9.5 per cent and was now forecast to grow at 4.8 per cent a year during the period.
Ms Brown said in terms of value of work, all three sectors grew strongly, especially in the 2002-03 and 2003-04 financial years.
In those two years, the engineering sector grew 20 per cent and 7 per cent; non-residential 11 per cent and 6 per cent and the residential sector 15 per cent and 4 per cent respectively.
Spending in the engineering and non-residential sectors was forecast to outstrip the residential sector in the next two years.
The Construction Industry Forum said spending growth would rise by 9.3 per cent and 4.6 per cent respectively in the next two years, against growth of 1 per cent in the residential sector.
