Australia: Construction market holds steady in early 2025

RICS Australia Construction Monitor, Q1 2025

The Royal Institution of Chartered Surveyors (RICS) has released its latest Global Construction Monitor, highlighting a resilient outlook for the Australian construction industry at the start of 2025, with sentiment holding firm despite ongoing challenges.

According to the survey, the Construction Sentiment Index (CSI) remains strong at +8, matching the robust confidence levels recorded at the end of 2024 (+7). While workloads are showing a mixed performance across sectors, the overall tone points to continued growth, particularly in residential construction.

Private residential activity recorded a net balance of +12, up from -2 in Q4 2024. Meanwhile, private non-residential workloads declined from +5 last time to -3. Infrastructure activity remained positive at +2 (+15 in Q4), continuing a steady albeit declining trend.

Looking more closely at infrastructure, energy projects led the way with a net balance of +34, followed by water and waste at +22, and transport at +15. Agribusiness was the only area in decline, at -6.

Expectations for the next 12 months remain positive across all main sectors. A net balance of +33 of respondents expect infrastructure workloads to rise, with private residential and private non-residential each projected to grow by +30.

Despite these promising indicators, the industry continues to grapple with widespread skills and labour shortages. A net balance of +72 of respondents highlighted skills shortages as a major concern, with particular difficulty finding skilled tradespeople (+64), quantity surveyors (+53), and managers (+33). Labour shortages remain high at +50, and cost pressures and financial constraints, both cited by 53% of respondents, are also holding back activity.

Credit conditions remain slightly restrictive, with a net balance of -4, though this reflects an improvement from -11 recorded in Q4.

Overall, while the Australian construction sector faces ongoing operational challenges, the strong sentiment and solid pipeline of expected work suggest continued momentum through the year ahead.

Kevin Brogan FRICS FAPI, Chair of RICS Australasia Board

The increased strength of the private residential construction category reflects the significant focus at all levels of government to resolve the chronic housing affordability and availability issues in Australia and the easing of focus on infrastructure projects to free up more construction resources for the housing construction sector. The difficulties with respect to skills shortages continues and it is important that further steps are taken to address both the lack of skilled workers in Australia as well as measures to upskill professionals who are already working in the sector.