2018 CCF Victorian Infrastructure Outlook Report 1 | Page 22
Recent Trends and Outlook for
Construction Activity
Unlike other resource rich states, Victoria’s construction
industry is not heavily influenced by the requirements
of the mining industry. Since 2001/02 total construction
activity (including residential building, non-residential
building and engineering construction) has trended
higher, year on year, and except for brief periods of
declines (2006/07 and again in 2012/13 and 2013/14). In
dollar terms, construction work done in Victoria soared
from $22.0 billion to $43.8 billion 1 between 2001/02 and
2016/17.
The robust growth masks cyclical trends in each of the
subcategories to total construction. For example, the
residential sector had cyclical lows between 2004/05
and 2006/07 before rebounding between 2008/09 and
2010/11. The peak in the residential segment is expected
to occur in 2017/18 at $21 billion, before recording
negative growth between 2018/19 and 2020/21. Non-
residential construction activity increased from $5.6
billion in 2000/01 to $10.4 billion in 2016/17 with cyclical
weakness and declines experienced between 2009/10
and 2012/13. The outlook for non-residential building is
expected to weaken towards 2021/22.
Construction within engineering construction industry
has experienced rapid and accelerated growth driven by a
range of projects in roads, electricity, water and rail. There
were also a handful of projects within mining and heavy
industry during the period including the development of
the Kipper gas field and the Longford Gas Conditioning
Plant. The other contributor has been development of the
brown coal mines. Overall, engineering construction is
expected to peak at $13.1 billion in 2018/19 driven by road
and rail projects before easing in following years.
The overall outlook for construction activity is strong in
the short term before weakening from 2018/19 to 2020/21.
The period of growth in the short term is attributable to
strength in the non-residential building segment and in
engineering construction. The weakness from 2018/19 is
driven by slower growth in all three segments (residential,
non-residential and engineering construction). Despite
the Victorian economy being more evenly balanced
than when compared to resource rich economies, the
simultaneous decline in all three segments will weigh on
the State’s economy.
Longford Gas Plant
Source: Friends of the Earth, Melbourne
All figures quoted in this section (unless otherwise specified) are expressed in constant 2014/15 prices. This means that changes in
the dollar value represent changes in the quantity of work, not changes in price. A discussion of price changes for construction work
is presented at the rear of this section.
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