Building activity weakens as housing market braces for Budget fallout

8 July 2026

Today’s ABS building activity data for the first quarter of 2026 shows the market was already struggling in the lead up the Federal Budget. During the January to March quarter:

• New home building starts plunged by 11.2 per cent, with the higher density part of the market suffering a 19.8 per cent reverse
• Non-residential building rose by a welcome 2.2 per cent however worsening conditions since March may remove some of the shine.

Builders are warning that conditions have not improved since and will be made worse by the Federal Budget’s policy settings.

Master Builders Australia Chief Economist Shane Garrett noted that the March 2026 quarter was a difficult one, dominated by the Middle East conflict and a return to rising interest rates.

“Home building activity has been hurt by escalations in building costs and continued shortages of skilled tradies. Construction demand across housing, non-residential building and civil have all been squeezed by higher interest rates,” commented Shane Garrett.

Master Builders Australia CEO Denita Wawn said the figures come at a time when builders are already reporting softer market conditions in response to Federal Budget measures.

“The ABS figures show building activity remains below the level needed and, at the same time, builders are telling us that uncertainty created by the Federal Budget is affecting confidence and slowing investment decisions.

“This uncertainty means some builders will think twice before proceeding with new projects. In some cases, projects may be delayed, scaled back or not proceed at all.

“Australia cannot afford policies that make it harder to attract investment into construction when we need to deliver more homes, transport infrastructure, schools, hospitals as well as energy and Olympic projects over the next decade.

“That’s why the Government should reconsider its proposed trust tax changes that are currently undergoing consultation. Around one in five construction businesses operate through trust structures as a legitimate way of managing risk in one of the economy’s most volatile industries. Increasing costs and uncertainty for those businesses will only make it harder to deliver the homes and infrastructure Australia needs,” said Ms Wawn.

Media contact: Dylan Hafey, Adviser, Media & Government Relations

0497 330 064 | dylan.hafey@masterbuilders.com.au