Australia: Private Residential Construction Indicators Move Backwards

Australian private residential construction indicators have taken a backwards step, with concerns easing over the Middle East conflict while the cost of materials remains high.

The Q2 2026 Global Construction Monitor has been released, showing a general increase in the global Construction Sentiment Index from +8 to +13.

In Australia, the Construction Sentiment Indicator moved downward from +11 to +8, with positive growth in current workloads being recorded in infrastructure/public works, which moved from +14 to +19, and private non-residential, which went from -6 to +4. These offset a decline in private residential current workloads from +3 to -4.

In terms of infrastructure, ICT moved forward from +17 to +19, energy slipped backwards from a high of +26 to +23, social infrastructure also moved backwards from +8 to +2, transport strengthened from +13 to +18, water and waste slipped back from +14 to +8 and agribusiness continued to slip, moving from -15 to -25.

In terms of current conditions, profit margins improved while remaining in negative territory, moving from -14 to -6; new business enquiries remained relatively steady, moving from +12 to +13; more issues with payment delays were flagged, moving from +10 to +21; headcount issues eased, moving from +8 to +4; and cost of materials remains very high, although it eased a little from +86 to +79.

12-month expectations for construction dropped across most sectors, with only private non-residential and profit margins holding steady, at +8 and +4 respectively, and only headcount rising, from +22 to +24. Private residential dropped from +28 to +4, and infrastructure/public works dropped from +44 to +33.

Factors holding back activity remained relatively steady, with competition increasing from +33 to +38, cost of materials dropping one point from +77 to +76, financial constraints dropping from +56 to +51, shortage of materials staying high and steady at +49, skills shortages going up from +62 to +67 and weather moving upwards from +27 to +34.

In terms of skills shortages, shortages of civil engineers (+31 to +38), managers (+38 to +48) and quantity surveyors (+49 to +61) all rose, with building (control) surveyors remaining steady at +26, skilled trades dropping one point to +63 and unskilled labour dropping nine points to +28.

The 12-month expectation of construction sentiments for tender prices, construction costs, material costs, skilled labour costs and unskilled labour costs all dropped.

There was also easing sentiment for credit conditions, with the past 3 months recording a drop from -25 to -21, the next 3 months dropping from -31 to -22 and the next 12 months also dropping from -39 to -29.

Vishant Narayan FRICS, Member of the RICS Australasia Regional Advisory Board:

"Three out of four global regions have tracked positive sentiment in the Global Construction Monitor; however, Australia has taken a step back this quarter. The Australian construction sector is signalling a substantial response to the capital gains tax changes in the private residential sector.

"This is further exacerbated by high material costs, worsening payment delays and increasing shortages of key professionals such as quantity surveyors – all of which continue to weigh on the sector."