State of the Construction Industry 2024

In our past two annual summaries we have aimed for a cautiously optimistic attitude towards the state of the construction industry.

Of course we hoped that the mounting pile of pressures facing builders in Australia would have eased by now, but that does not seem to have been the case. We will nonetheless close out the year again in anticipation that there is success to be found by solid, prudent and business-savvy operators in the upcoming construction environment.

But that is not to suggest anyone would describe 2024 as one for the record books.

The residential building market remains extremely challenging. Between interest rates holding steady, continued challenges in supply pricing, and tight competitive margins we still see residential builders make the insolvency headlines consistently throughout the year. While residential approvals are up, actual commencement of building dwellings is down, despite bold promises by various politicians.

The ABS reports a slight increase in the total value of construction work done both from June to September, and from Sept 23 to Sept 24, but overall the percentage growth remains fairly modest and the revenue growth is not necessarily indicative of profit growth.

In Queensland, the “Best Practice Industry Conditions” imposed on infrastructure jobs have funnelled labour away from non-Government work and created significant cost pressures on private and commercial projects trying to source timely labour without making every project run at a loss. Industry chat suggests that some unions are now attempting to loop in BPIC to their next EBA negotiations. However, as the new Qld Government has paused the use of BPIC on major projects pending review by the Queensland Productivity Commission, this will be a hot “watch this space” topic for 2025.

And yet despite these challenges, our resolve remains that opportunities exist for the astute construction business. While a dose of political will and a degree of luck will certainly play a role, some key ingredients are going to be:

1. Know when to walk away from a deal – understanding when the risks of a project are simply too high for your company at the time is critical for the long term survival of any construction business;
2. Rigorous, compliant contract administration – the businesses that consistently come out better from projects are those who understand, implement and document their projects diligently and correctly;
3. Know when to fight, and when to make amends – disputes of various kinds are commonplace in construction, and having a sound commercial approach to decisions about when and how to conduct a dispute will make a material difference over the long term.

Here at Batch Mewing we’re looking forward to a few days off to refresh, recuperate and spend time with our family and friends. We’d like to thank you all for your support this year, and wish you a Merry Christmas, and a happy and prosperous new year.