Data centres and infrastructure are pulling trades from housing
Just as construction cost pressures seemed to be easing, Australian costs are climbing again, according to Ray White Group chief economist Nerida Conisbee.
New dwelling prices rose 5.7% in the year to July, sharply up from annual growth of just 0.7% a year earlier, with the Australian Bureau of Statistics attributing the jump to builders passing on higher labour and material costs.
The renewed pressure comes as Cotality's Cordell Construction Monthly for September shows a national project pipeline worth $18.6 billion, spanning 1,327 new projects identified in August, up 11.3% over the past three months. Apartments and units were the only residential category to grow year-on-year, rising 19.2%, even as the broader number of projects moving into construction fell 12.1% over the past 12 months.
Skilled labour remains the binding constraint
Conisbee said the labour pipeline is failing to keep pace with demand.
"Australia has a structural shortage of people able to build what we are planning to build," she said.
Apprentice completions have fallen 38% over the past decade, and only 38% of advertised construction trade vacancies are being filled, compared with 66% across all occupations. Master Builders Australia has quantified the scale of that gap, putting the national construction workforce shortfall at 141,000 workers — against just 7,040 skilled visa holders currently working in core construction trades nationally, even after recent changes to treat housing trades the same as university qualifications in the skilled migration points test.
Materials are adding to the strain, with input costs into house construction up 3.8% over the year, and electrical cable and conduit prices jumping 11.2% in just three months.
Government and private pipelines compete for the same resources
The ABS has flagged that public-sector activity is increasing competition for resources including labour, concrete and copper, Conisbee noted, with national major-project activity estimated to peak near $80 billion in FY26.
Private-sector demand adds to that pressure: CreditorWatch warns a $150 billion data centre pipeline to 2030 is pulling trades away from residential builders, with New South Wales and Victoria absorbing roughly 91% of it. This is reflected in Cordell's tracking this month of Queensland's correctional and health infrastructure projects, which together total more than $2.5 billion in new activity.
Construction insolvencies reached 941 in August, though more than half were tied to the collapse of a single company, Bathla Group.
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