A market report from the Building Materials Market Association has forecast the sector will fall for a sixth straight year in 2019.
The Australian Building & Construction Council (ABCC) said in a report released today that in 2019, the sector could fall by 10.4 per cent, to $2.4 billion.
While it will shrink by 8.1 per cent to $1.9 billion, the association expects the sector to grow by 1.5 per cent in 2019 and by 5.6 per cent over the next two years.
It said this could lead to a 10 per cent decline in the sector in 2019 compared to 2016.
“While the building materials market has improved over the past year, its performance in 2019 will be more challenging than in 2016,” ABCC chief executive, Dr Peter Llewellyn, said in the report.
“The market has been in free fall over the last three years, with the price of building materials rising at double-digit rates and there has been a clear disconnect between consumers and builders.”
The ABCC report said a number of factors could see the market shrink over the coming years, including a shortage of materials and an ageing population.
It warned that over the course of the decade, it expects to see a decline in both new construction and residential building, with a greater emphasis on commercial buildings and homes.
“We will see a further decline in consumer spending and an increased reliance on investment capital, as new building construction is driven by lower yields of existing stock,” the report said.
“In addition, many households will continue to be unable to afford to purchase building materials.”
A number of major building firms have been hit by the downturn in the building industry.BHP Billiton, the world’s largest miner, was among the worst-hit, with total losses exceeding $US1 billion.
“There will be a significant reduction in the amount of available materials and the availability of new materials, which will have a significant impact on the supply chain,” Mr Llewelyn said.
Building materials market growth is forecast to fall from 7.1 to 5.9 per cent.
The ABAC said that while the industry was recovering from the mining downturn, there were still risks ahead.
“It will take some time for the sector and industry to regain the full competitive advantage, particularly as it takes some time to regain consumer confidence,” Mr Brough said.
“It may take a longer time to recover the manufacturing confidence of workers and suppliers than the construction industry.”
Building materials were also a key driver of the overall Australian construction industry.
The market is expected to grow from $US6.5 billion to $US8.6 billion.
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