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1 October 2026
Prospects for Australia’s building and construction sector have deteriorated according to the Master Builders Australia forecasts released today, with projections for all three segments of the industry being downgraded since previous forecasts were published in March. Over the 5 years to 2030-31, Master Builders projects that:
- Less than 920,000 new homes will commence, an 8.4 per cent write down compared with March’s forecasts;
- $331 billion worth of non-residential building work will get carried out; and,
- $688 billion in engineering construction work will get completed.
The worsening outlook for new home building drags us even further away from our National Housing Accord target. Our forecast horizon will see 62,000 fewer new home building starts compared with what we expected in March. It is now anticipated that a 262,000-home building deficit will accumulate over the full term of the Accord. Master Builders Australia Chief Economist Shane Garrett blamed the downgrade on policy decisions in the May 2026 Federal Budget, continued interest rate increases and the unfavourable geopolitical environment. At the same time, little progress has been made on enhancing the industry’s supply side capacity.
“New home builders are in the eye of a perfect storm. It’s much harder to sell new homes when established dwelling prices are on the way down. This is made worse by the fact that builders have no room to reduce their costs because of the pressures arising from tradie shortages and escalations in the price of key building materials.
“Interest rate rises have eroded prospects for new homes and made it much more expensive for our homebuilders to carry out work. Our economy’s abysmal productivity performance raises the risk that several more hikes will be needed to quell inflation. If this happens, prospects could worsen further.
“Demand for non-residential building is partially insulated by its substantial portfolio of public sector funded projects. The five years to 2030-31 should see $331.0 billion worth of non-residential work get carried out, slightly stronger (+2.9 per cent) than what we got over the past five years. Data Centres have emerged as one of the most interesting features in this part of the market,” said Mr Garrett.
“For civil and engineering construction, resources and utilities projects are expected to be the strongest performers. In contrast, both transport and recreation-related construction are looking at significantly less work compared with recent years.”
Master Builders Australia CEO Denita Wawn said these forecasts provide further evidence that policy is moving in the wrong direction and needs to change course.
“Modelling confirms that the Budget will deprive us of many new homes over the years ahead, and force rents even higher. Master Builders raised the alarm early this year that this would be the result, the Government chose to proceed and now the consequences are clear,” said Ms Wawn.
“New home building struggles to expand because of tradie shortages, reduced investment, declining productivity and regulation totalling up to $320,000 per new house.
“The Federal Budget tax changes that are pulling down supply and jeopardising the financial viability of projects, especially in the higher density sector, must be reversed. Builders are calling for a pro-construction agenda that removes unnecessary regulation, improves the investment environment and fixes the systems they rely on, including the National Construction Code, skilled migration settings and domestic training pathways.”
The forecasts can be purchased by the public here
Media contact: Dylan Hafey, Adviser, Media & Government Relations
0497 330 064 | dylan.hafey@masterbuilders.com.au