The latest construction industry market sentiment report, released by Arcadis and the Australian Constructors Association in May 2024, reveals increasing concerns about the impact of political decisions on project pipelines and the significant effects of the current industrial relations environment on construction costs.

Significant real wage rises, combined with stagnant productivity growth, are major factors driving up construction costs, which in turn are reducing the amount of infrastructure that governments can afford to build.

Higher labour costs and stagnating productivity growth are also diminishing the financial viability of commercial developments. The disparity of wages between government and private sector projects has left the private sector unable to complete with a staggering 81% of respondents reporting either stagnation or decline in the residential construction sector.

The report also raises concerns over the declining market sentiment caused by government cut backs, commercial sector uncertainty and delayed commencement of new energy initiatives.

We can’t afford to continue with business as usual; project planning needs to be improved and construction costs need to be lowered to ensure the country can afford the infrastructure it needs. We need to double down on collaboration to solve project challenges together and we need to improve industry productivity as a matter of urgency.

Key statistics

  • The hottest sectors across the construction industry are Energy and Power (81%), Water (71%) and Defence (67%).
  • 81% of respondents confirmed that the residential sector has either stalled or is in decline.
  • 71% of respondents indicated the water sector is a rising market.
  • Skilled trades, general labour and consultant costs have held steady from last year with an average increase of approximately 5%.

Further information: 

Download the 2022 report.