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Highlights
- Residential construction reaches its highest point in three years during the September quarter.
- Infrastructure spending fuels engineering construction growth, while commercial construction declines.
- Total construction output hits its strongest level in seven years.
Housing construction activity has surged to a three-year high during the September quarter, driven by stable borrowing and building costs. According to the Australian Bureau of Statistics (ABS), the value of residential construction increased, reflecting positive sentiment within the sector.
The value of residential construction rose by 1.8% in the third quarter, building on gains from previous periods. This marked an improvement over the growth rates of June and March quarters, which were 1.2% and 0.9%, respectively. The sector's performance translated to $23.4 billion in residential construction output, the highest quarterly reading since September 2021. The data underscores a revival in housing activity as market conditions stabilize.
Infrastructure investments also drove growth in construction engineering, which rose by 2.6% to $34.7 billion over the same period. This uptick reflects increased national and state spending on large-scale projects, highlighting infrastructure as a key contributor to the sector’s overall performance. Companies involved in infrastructure development, including (ASX:DOW), are likely benefiting from this heightened activity.
In contrast, commercial construction experienced a decline, contracting by 1% to $15.3 billion. This dip signals challenges in the non-residential segment, potentially linked to economic headwinds impacting demand for commercial spaces. Companies operating in this space, such as (ASX:CIM), may face pressures to adapt to these shifts.
Total construction output for the September quarter climbed 1.6% to $73.3 billion in seasonally adjusted terms. This figure marks a seven-year high, driven by the combined strength of residential and infrastructure construction. The sector's performance reflects a balanced approach to growth, with infrastructure and residential projects compensating for the softness in commercial activity.
The latest data paints a positive picture for Australia's construction industry, particularly in the residential and infrastructure sectors. Companies with exposure to these areas, including (ASX:BLD), continue to play a significant role in supporting growth and meeting rising demand for housing and infrastructure.
This surge in construction activity underscores the sector’s resilience and its pivotal role in driving broader economic momentum. The sustained focus on infrastructure development and housing growth highlights the evolving priorities within the Australian construction landscape.
