Australia Construction Market to Grow by 3.8% in 2025

Strategic Insights -

The Australian construction industry is expected to grow by 3.8% in real terms in 2025, driven by investments in transport infrastructure, manufacturing, housing, and renewable energy projects. The federal government has unveiled a budget that increases general government expenditure from AUD762.8 billion ($504 billion) in FY2024-25 to AUD785.7 billion ($519.1 billion) in FY2025-26. However, rising insolvencies in the construction industry have weighed on its output, with a 35.5% YoY increase in the first six months of 2025.

Key Takeaways:

  • The Australian construction industry is expected to grow at an average annual rate of 3% from 2026 to 2029, supported by public and private sector investments in housing and transport infrastructure projects.
  • The Northern Australia Action Plan (2024-29) will invest AUD30 billion ($19.8 billion) in improving affordable housing and transport infrastructure in Queensland, Western Australia, and the Northern Territory by 2029.
  • The industry's growth will be driven by the transport infrastructure sector, coupled with investments in manufacturing, housing, and renewable energy projects.
  • However, the industry's output has been weighed down by rising insolvencies, with a 35.5% YoY increase in the first six months of 2025.
  • The total number of companies undergoing insolvency appointments within the construction industry grew by 18.9% in 2024.

Statistics:

  • Australian construction industry expected to grow by 3.8% in real terms in 2025.
  • General government expenditure to increase from AUD762.8 billion ($504 billion) in FY2024-25 to AUD785.7 billion ($519.1 billion) in FY2025-26.
  • Insolvencies increased by 35.5% YoY in the first six months of 2025.
  • Northern Australia Action Plan (2024-29) to invest AUD30 billion ($19.8 billion) in infrastructure projects.
  • Industry expected to grow at an average annual rate of 3% from 2026 to 2029.

Sources:

  • Research and Markets: "Australia Construction Market Size, Trends, and Forecasts by Sector - Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential Market Analysis to 2029 (Q2 2025)"
  • Australian Securities and Investments Commission (ASIC): "Construction industry insolvencies increase by 35.5% YoY in first six months of 2025."
  • Australian Government: "Fiscal Year (FY) 2025-26 Budget"