Industry body warns of worsening outlook as budget measures and cost pressures threaten supply targets
Residential building activity declined in the first quarter of 2026, raising fresh concerns about the nation's ability to meet housing supply targets, according to the latest Construction Work Done data from the Australian Bureau of Statistics (ABS).
The 0.6% quarterly fall in residential construction — the first since June 2025 — came despite overall construction activity rising 3.4%, driven largely by a 6.9% increase in engineering work.
Value of building work done, seasonally adjusted chain volume measures 
Source: Australian Bureau of Statistics
Industry body Master Builders Australia warned the outlook could deteriorate further. "The impacts of the Middle East conflict, interest rates and the Federal Budget's tax hikes on housing and construction investment will continue to make matters worse," said Denita Wawn (pictured right), chief executive officer at Master Builders Australia.
"Builders are facing a range of challenges, including supply chain disruptions, workforce shortages and red tape. Even prior to the Budget changes, the National Housing Accord is forecast to be over 200,000 homes short of target.
"Now is not the time to make the job even harder, with Treasury expecting that the tax hikes on housing will result in 35,000 fewer homes. We urge the Parliament to work together to ensure the Budget legislation increases, not decreases, housing supply."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
