The construction industry can expect a recovery in the year ahead courtesy of rebound in the residential building sector. BIS Shrapnel is forecasting that national building starts will rise for the first time in three years in 2013-14, driven by a recovery in the new homes market.
But the improvement won't be broad-based; non-residential building is expected to "drift sideways" - with the exception of the commercial and industrial markets.
"As the Australian economy begins to respond to lower interest rates and more positive global economic news, confidence will tentatively return", according to BIS Shrapnel's building industry prospectus.
The value of building commenced is expected to rise 3 per cent over the current financial year, after falling about 1 per cent in 2012-13.
NSW will put in the strongest performance, with 13 per cent growth, followed by South Australia at 8 per cent and Queensland at 7 per cent.
Victoria is expected to act as a "minor drag", with a 2 per cent decline. As the mining boom fades, Western Australia will experience a 6 per cent decline.
Continued population growth is also tipped to cause housing supply issues in NSW, Queensland and Western Australia.
Dwelling commencements are expected to rise 8 per cent when the final statistics for 2012-13 are compiled. They are forecast to rise another 2 per cent this financial year.
In the non-residential sector, BIS Shrapnel is forecasting a "modest" 4 per cent expansion in building commencements, which includes mining, defence, commercial, and industrial spending.