New ABS data reveals that for the December 2018 quarter, the total volume of construction across Australia fell by 3.1 per cent, resulting in an overall decline of 2.6 per cent in 2018. Victoria fared much stronger, in which it experienced a decline of only 1.1 per cent for the December 2018 quarter and an overall strong increase of 15.1 per cent for 2018. Such growth in 2018 significantly surpasses that of the national volume and of the other states and territories. This is largely stemming from Victoria’s strong engineering construction activity seen in infrastructure projects like the Melbourne Metro Rail project and the Westgate Tunnel, and strong housing demand caused by robust population growth.

The information below summarises activity for each construction sector.

Residential building:

Residential building in Australia set a new record in 2018, recording a growth of 4.2 per cent, reaching $77.7 billion for the year. Nevertheless, such growth included declines in the September and December 2018 quarters, where residential building activity declined by 1.8 per cent and 3.6 per cent respectively. The initial strong growth in this sector was largely stemming from home building approvals that commenced in 2017 – prior to the tightening of credit standards and the Royal Commission into banking activity.

Victoria experienced a decline of 1.2 per cent in the December 2018 quarter and an overall increase of 8.9 per cent for 2018. Much of the increase was induced by apartment developments and is a reflection of the increase in housing demand caused by Victoria’s strong population growth.

Non-residential building:

2018 saw a strong national non-residential construction sector which grew by 1.9 per cent during the December 2018 quarter and 4.9 per cent during 2018 overall, thus making 2018 the best year ever for non-residential building work. This is supported largely by population growth which boosted consumer spending.

This is no less reflected in Victoria, in which its non-residential construction sector experienced a growth of 2.9 per cent for the December 2018 quarter and a growth of 9.6 per cent overall for 2018. 

Engineering construction

Nationally, engineering construction is on the decline, with a 5 per cent drop during the December 2018 quarter and an overall decline of 12.4 per cent for 2018. Despite heavy state government investment in infrastructure projects in states like Victoria, this was overshadowed by weakness in mining infrastructure investment in Western Australia and the tapering off of NBN activity.

Notwithstanding the level of national engineering construction activity, Victoria, as discussed before, is experiencing strong growth in engineering construction activity. Despite the 4.1 per cent decline in the December 2018 quarter, Victoria leads the states and territories in engineering construction with an overall growth of 30.5 per cent for 2018. Infrastructure projects like the Melbourne Metro Rail project and the Westgate Tunnel are the main factors for this.