Construction activity in Victoria continues to power ahead with all three primary sectors recording strong growth. Activity is led by residential construction which has been on a solid growth trend since 2014 growing by approx. 40% in 4 years. Whether this growth can continue when faced with significant headwinds in the form of a falling housing market and increasing barriers to new lending will have to be seen. As the pipeline of major infrastructure works continues to break ground, Engineering Construction has shot up by 30% in 3-4 years driven by the Level Crossing Removal project, Freeway improvements and the start of the Metro Rail Tunnel project.

A strong pipeline of works in Victoria will continue to deliver growth in Engineering Construction out to at least 2021/22 with new works on the Westgate Duplication, Missing North-East Link Freeway and a long tail of rail works all contributing. In line with the national commentary, Victoria is on the receiving end of the pivot from Mining to the more traditional economies even as manufacturing has been significantly diminished in the state. An exchange rate (vs USD) between the 60c – 70c zone will support this ongoing investment in non-residential construction however any unexpected increase in the exchange could put at risk a number of medium-long term projects

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