The decline in residential construction activity may have bottomed out nationally, according to BIS Shrapnel’s five-year update. The report offers a national outlook over the next five years, including different drivers of activity across the states, and the shape of the cycle through the upturn.

“First home buyer demand is showing early signs of recovery in a number of states, while dwelling deficiencies are building up in New South Wales, Queensland, Western Australia and Northern Territory,” the report says.

National dwelling commencements are forecast to rise through to 2013/14, following a relatively flat 2011/12. The rise in activity in these states over the next three years is expected to more than offset the slowdown in other regions, where dwelling starts have already been running at high levels, the report says.

According to the forecast, the building sector on the non-residential side is also expected to return to growth in future.

“Public spending on buildings, specifically on hospitals is forecast to run at a very high over the next two years, before weakening from mid-2013 as funding allocations are scaled back. Commercial and industrial building will also continue its recovery from a low base, as demand for new space rises and economic conditions show gradual improvement.

Source: Property Council of Australia