Building approvals slump as industry braces for tax changes

2 June 2026

Today’s ABS building approval data for April shows a 3.4 per cent drop in new home building approvals. Higher density dwelling approvals fell by 7.2 per cent and new detached houses dropped by 0.9 per cent.

“Today’s results confirm that new home building was already on the back foot in the lead up to the May Federal Budget, with approvals falling in both March and April,” said Master Builders Australia Chief Economist Shane Garrett.

“Independent modelling tells us that the Federal Budget changes including new restrictions on Negative Gearing and Capital Gains Tax will result in a net decline of 8,700 new homes from the building pipeline over the next four years, exacerbating our shortage of homes,” said Mr Garrett.

Independent modelling also shows that the Budget will hit construction jobs and GDP while causing rents to increase.

Master Builders Australia CEO Denita Wawn says a housing crisis is not the time to place more hurdles in front of small builders, who make up 98 per cent of the industry.

“A housing crisis is the time for governments to focus on policies that increase housing supply, including addressing a workforce that is hundreds of thousands short, reducing unnecessary red tape, and improving, not disincentivising, the investment pipeline.

“Competition regulators must also ensure the surcharges recently introduced by some businesses in response to the Middle East conflict are rolled back as swiftly as they were introduced when conditions allow.

“These pressures are being compounded by broader economic factors, including the impacts of global conflict and higher interest rates. Master Builders is urging policymakers to take into consideration all of these factors, and to ensure that the Budget legislation is an intervention that will increase and not decrease our housing supply,” said Ms Wawn.

In addition to the tax hikes on housing, the Federal Budget also proposes tax changes to trusts.

“Builders are particularly concerned about the lack of grandfathering provisions in relation to trusts, which creates uncertainty and potential cost implications for long-established business structures.

“It risks unintended consequences across the building sector, with small businesses using this business structure to manage the inherent risks and volatility in the sector.

“In order to grow the number of builders and housing supply, small businesses require a system that is consistent, predictable, and recognises how they actually operate, and more consultation is needed in this space,” said Ms Wawn.

Media contact: Dylan Hafey, Media Advisor

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