Home building to strengthen in 2026

Australia’s home building industry is expected to strengthen through 2026, supported by gradually improving building approvals and a recovery in demand, the Housing Industry Association said this week.

HIA Senior Economist Tom Devitt said recent data on approvals and inflation provides an important signal for the housing market as it enters 2026.

“Building approvals are the clearest leading indicator of future home building, and they have been gradually rising over the past year as the cash rate fell”, Devitt said.

“Building approvals data shows activity has been strengthening over the last couple of years, including a 10.1 per cent increase in house approvals in the last three months compared to the same quarter two years earlier, and a 36.4 per cent increase in multi-unit approvals over the same period.

“We expect approvals to continue trending upward, which should translate into higher levels of home building activity through 2026, particularly once the impact of earlier rate cuts flows through to construction starts.

"It is anticipated that a recovery will continue in both detached housing and multi-unit construction from 2026 onward, following several years of subdued activity, especially in the apartment sector.

Devitt said that after nearly a decade of underbuilding, the foundations are finally being laid for a broader housing recovery in 2026.

“Strong population growth, rising established home prices and an improving approvals pipeline are all pointing toward higher levels of home building over the next few years.

According to HIA estimates, Australia remains short of its housing needs by close to two million homes, with population growth continuing to outpace new supply.

“This is the central challenge facing the housing market in 2026”, Devitt concluded.

HIA’s outlook shows detached home building strengthening across most states in 2026, led by Queensland, South Australia and Western Australia, with New South Wales and Victoria beginning to recover after lagging earlier in the cycle.

The multi-unit sector is also expected to turn a corner from 2026, as higher established unit prices improve project feasibility and a large pipeline of approved but not commenced projects begins to move.