5 Major Trends in Residential Construction in 2023

The construction industry relies on economic, environmental, and socioeconomic factors to predict future trends. According to recent research, the value of residential construction work done in Australia as of 2022 reached $63 billion across both private and public sectors. While this marks a decrease from 2018's peak of $81.97 billion, the jury's still out for how the Australian residential construction industry will go this year. Among increases in building costs and financial difficulties, experts aren't able to determine the industry's future just yet. In this article, we'll explore the five major potential trends for residential construction in 2023:

Energy efficiency and sustainability

Like many other industries, sustainability has become a priority for the construction industry. Among many initiatives, minimising energy use is an important goal for residential construction and homeowners. Having the right kind of energy-efficient air conditioning is a vital part of reducing home energy costs and consumption. Most AC units turn on at maximum fan strength immediately, consuming more energy than necessary. Investing in energy-efficient models such as Fujidenzo's inverter-grade aircon offers up to 30% energy saving by controlling its fan speed upon activation. The residential construction industry should continue looking into greener products to feature in their builds. Aside from air conditioning, homes are now constructed with additional sustainability and environmental factors in mind, such as using solar panels for electricity. Cool roofing is also a critical trend for Australia, as this innovation reduces heat absorption in house structures and saves energy from cooling or heating appliances.

Design and architecture

Together with the construction sector, the architecture industry is also expected to grow in the coming year. Among many architecture firms, some have shifted towards the residential sector to satisfy consumer demands, given lower interest rates and the rise of remote or hybrid work brought upon by the pandemic. More people are remodelling their homes or relocating to other cities to upgrade their lifestyles and remote work arrangements. Insights from architecture firm The Mill indicate that despite rising interest rates, "a huge waitlist" remains for the firm's residential construction work, contributing to steady growth for The Mill since the first pandemic lockdown. From penthouse apartments to skinny houses, the architecture and construction industries will work more closely to meet consumer demands for aesthetic and sustainability initiatives.

Labour shortage

The availability of skilled trades in the residential building industry has become a cause for concern lately. The elevated demand for houses has exacerbated constraints in access to skilled trades, with job vacancies at record highs across industries. Focusing on employee management and development within the construction industry is essential to mitigate the worst effects of this shortage. We've previously written about how connecting with your employees helps create a better construction business, and this is especially important now. Improving communication between different levels and branches in a construction business helps keep everyone connected and on the same page.

Property pricing

Australia's property market is infamously expensive. While low-interest rates and the tax system contribute to short-term jumps in house prices, key demographic factors have helped turn Australia into one of the priciest property markets in the world. Research and surveys over the past years have indicated a close connection between house prices and official interest rates. The cost of housing, albeit affected by several other factors, is significantly sensitive to interest rates. Residential land now accounts for 48% of Australians' wealth, compared to 34% in 2012. This is partly due to population growth between 1982 and 2022, with housing demands boosted by migrants arriving in the country. As such, builders should monitor pricing trends and respond agilely to consumer needs.

Digital transformation

Finally, like many other industries, no doubt the residential construction industry is affected by digital transformation. Most recently, the 2022 - 2023 Federal Budget invested $1.3 billion in improved communications infrastructure and connectivity in regional, rural, and remote communities. Between the Australian and New Zealand construction sector, nearly 40% of companies plan to establish a digital transformation roadmap for the near future to help manage vast volumes of data and people, as well as adopt emerging technologies such as cloud analytics and drone deployment to help in construction workflows.

To conclude, despite short-term challenges and rising interest rates and inflation, the construction industry in Australia is predicted to still expand modestly in the coming years. However, experts predict that builders in residential construction may face a decline despite the steadily high demand for new home constructions annually, owing to the ongoing shortage of workers. Hopefully, the continuing adoption of digital transformation in the industry can help alleviate this concern.

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Article written by Roseanne Joneses exclusively for The Construction Coach.