Building starts slide as housing targets slip further away

New private‑sector house commencements eased 3.5 per cent over the quarter to 27,658 dwellings, while new private‑sector other residential starts – largely town houses and apartments – dropped 20.7 per cent to 19,116, even though medium and high‑density activity remained up 5.6 per cent on the March 2025 quarter.

The figures show 243,864 dwellings under construction during the March quarter, including 90,972 new houses.

Completions were mixed: new private‑sector houses finished fell 0.6 per cent on the quarter to 26,201 and were down 6.1 per cent on a year earlier, while new private‑sector other residential completions edged up 0.7 per cent to 16,365 – leaving total sector completions down 0.6 per cent at 43,816.

HIA: Annual starts well short of accord path

Housing Industry Association (HIA) senior economist Tom Devitt set the numbers against the federal government’s National Housing Accord’s trajectory, saying that the pace of new construction was not keeping up with target requirements.

“Australia needed to deliver an annual rate of 240,000 new homes to reach the 1.2 million new homes target, but in the 12 months to March, just 197,340 new homes commenced construction,” Devitt said.

He said that some states were pulling more than their weight, particularly in the west and north.

“Jurisdictions like Western Australia, Queensland, South Australia and the Northern Territory have been leading the national improvement in home building volumes and have a significant pipeline of new sales ready to commence. This will help smooth out on‑the‑ground activity through this year’s volatility,” he said.

“The south-eastern state and territory recoveries have been delayed and are more vulnerable, but as long as recent disruptions are short‑lived, strong population growth and tight labour market fundamentals should support activity here too.”

Devitt said that even under an optimistic scenario, the current path left the nation substantially short of what was required.

“This trajectory will not be sufficient to meet the Housing Accord Target, and Australia’s housing needs are even greater than this,” he said and added that HIA “estimates 250,000 home builds each year are required on a sustained basis to meet these demands and start addressing the pre‑existing shortage of housing across the country”.

Costs, rates, and budget weigh on starts

Master Builders Australia chief economist Shane Garrett characterised the March quarter as a challenging period where external shocks and tighter policy settings significantly impacted the construction industry.

Garrett pointed to cost pressures and labour constraints as key drags on activity.

“Home building activity has been hurt by escalations in building costs and continued shortages of skilled tradies,” he said.

“Construction demand across housing, non‑residential building and civil have all been squeezed by higher interest rates.”

Master Builders Australia CEO Denita Wawn said the ABS data was arriving just as builders were reporting softer conditions on the ground following the recent federal budget measures.

“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,” she said.

Wawn also said that heightened uncertainty was feeding directly into project pipelines.

“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,” she said.

[Related: Detached approvals hold firm as apartments slump]