Inflation surges to six-month high, driven by the cost of new dwellings

28 October 2026

Today’s Consumer Price Index (CPI) data, released by the ABS, further demonstrates the need to address escalating building costs, with housing being the largest contributor to annual inflation.

While inflation rose 4.3 per cent, new dwelling prices rose by 4.7 per cent. This increase continues the trend following the pandemic where the cost of building a home has risen by more than 50 per cent.

Master Builders Australia Chief Economist Shane Garrett highlighted the negative influence of housing costs on Australia’s worsening inflationary picture.

“The cost of creating new homes has outpaced general inflation over an extended period. Our construction businesses want to deliver new homes more quickly and less expensively, but policy settings are preventing this.

“Because housing costs weigh so heavily on family budgets, more expensive housing puts upward pressure on wages and costs right across the economy. This damages our economy’s ability to compete and to invest.”

Master Builders Australia Chief Executive, Denita Wawn called on the Federal Government to tackle this challenge head on.

“It is still possible to reduce the cost of building new homes – but we need major progress on productivity improvements and expanding the size of our workforce.

“Governments need to place downward pressure on the cost of locally manufactured building materials by supporting more affordable inputs, including energy costs.

“The policy settings must also support a competitive market that includes good quality and compliant building materials from international supply chains.

“The recent preliminary determination by the Australian Trade Remedies Commission on the importation of aluminium windows and doors is an important case in point. A poorly designed decision risks not only further increasing the cost of building a home, but it would also stifle international supply chains that fill gaps that local manufacturers simply cannot fill.

“If the federal government wants to tackle inflation, proposals that place more pressure on building costs need to be avoided.”

Media contact: Darren Disney, National Director – External Affairs & Engagement

0488 660 170 |darren.disney@masterbuilders.com.au