Australia’s residential construction industry is no small feat. In fact, new research suggests the industry generates a staggering $69 billion every year!
To provide a deeper insight into the dynamics of this vital sector, independent research body IBISWorld recently released a report analysing the state of Australia’s House Construction industry between 2019 to 2024. In this blog, we’ll take a deep dive into some of the more relevant statistics published in the report and discuss what they could mean for your business, and marketing going forward.
Industry Overview
For this report, IBISWorld analysed data from more than 82,000 people employed across 55,248 businesses in construction. The data showed that, on average, both construction employees and businesses have grown since 2019, by 1.5% and 2.6% respectively. Across the industry, and based on the companies analysed* construction companies have a 6.2% profit margin, with major business expenses allocated to purchases (73.6% of revenue), wages and rental costs.
Services
New home construction accounted for over half of industry revenue, while renovations, extensions and additions made up more than one-fifth. The industry’s remaining revenue comes from services like repairs, maintenance and prefabricated house assembly.
Target Markets
Over the last five years, the most common target markets engaging a builder for house construction have been private homebuyers, first-time homebuyers (though this is currently in decline due to rising interest rates), property developers, and public sector investment (currently increasing due to the National Housing Accord).
Location
The geographical data published in the report is also noteworthy. For example, Victoria is currently over-represented in enterprises and housing construction activity and consistently leads the country in single-unit construction, reflecting the sheer amount of available land.
New South Wales has a focus on higher-density residential buildings, while Western Australia has fewer businesses, but is home to several of the country’s top builders. Notably, the value of house construction in WA matches its share of the national population, meaning it’s a small but effective operation.
Industry Competition
It will come as no surprise that the construction industry is made up of many small-scale builders that operate in very specific geographic markets. More than half of construction companies analysed generate an annual revenue of less than $200,000 and less than 1% of businesses employ more than 20 workers.
While they might seem to be dominating the market, major companies like Metricon and NEX Building Group account for less than 10% of the industry’s total revenue. None of the major companies even account for 5% of industry revenue on their own. This is good news for our local custom home builders.
Additional Findings
Interestingly, the report found that new entrants to the industry may find it challenging to differentiate themselves from other, more established builders. This is why it’s so important to find your niche and carefully build your brand prior to jumping into the industry.
After the successful launch of the HomeBuilder scheme in 2020, we saw a large increase in new construction projects. Naturally, since the program concluded we’ve seen a decline in contracts signed and homes built, however research suggests the National Housing Accord and other programs like the Home Guarantee Scheme will provide additional support to homeowners and drive further growth in the industry in the coming years.
Looking Forward
The Future of Construction
Australia’s residential construction industry appears to be in a stage of moderate growth. While short-term prospects are being subdued by rising interest rates and the conclusion of stimulus programs like HomeBuilder, solid population growth will underpin long-term demand for new housing. Additionally, renovations and extension projects will continue to increase as more new homes are constructed.
Key Takeaways and Marketing Recommendations for Australian Builders
Now that we understand the current state of the industry, let’s translate a few of the above data points into actionable insights for everyday home builders. Here are our top tips, based on the report:
- Build a Strong Brand: More than 90% of the industry comprises small-scale builders like you, so it’s essential to build a strong brand to differentiate yourself from the competition. Focus on reputation and referrals by highlighting customer satisfaction, showcasing positive testimonials, and presenting high-quality projects. This will build trust and generate word-of-mouth referrals.
- Know Your Niche: Most construction companies operate in small geographic markets. It’s crucial to understand why you’re the best choice for your clients and communicate this effectively through your marketing channels. Consider diversifying your offerings to include high-density housing options, such as multi-unit developments and townhouses, in response to rising land prices and changing consumer preferences.
- Focus on Cost Control: Adjust your marketing strategies to highlight affordability and financing options, especially in light of current interest rates and mortgage affordability concerns.
- Get Tech Savvy: Promote technological advancements, such as using BIM software, virtual reality tours, and prefabricated components, to showcase your innovative approach and attract tech-savvy consumers.
- Regulatory compliance: Emphasise your commitment to regulatory compliance, particularly adherence to the National Construction Code and safety regulations, to reassure clients of your professionalism and reliability. For some ideas on how to do this, read our last blog
Need a hand actioning the above points? Looking for a comprehensive marketing strategy that’s tailored to your brand and business? Get in touch with the expert team at Sea Salt Marketing today.
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*IBISWorld analysed data from nine major construction companies for this report. These companies were Metricon Homes, ABN Group, NEX Building Group, Sumitomo Forestry Australia, BGC Residential Pty Ltd, Simonds Homes, Corporate IP Holdings Pty Ltd, Hotondo Homes and Burbank Australia. Read the full report here.
