Australia’s residential building industry has started 2026 with small business confidence still fragile, as rising costs and policy uncertainty weigh on the sector.
New research from the Housing Industry Association (HIA) shows many small builders remain wary about the year ahead, even with solid underlying demand for new homes.
It comes as economists warn Australia is still well short of the National Housing Accord’s target of 240,000 new builds a year, with approvals and record-high build costs pointing to housing affordability worsening further in 2026 and relief unlikely before the end of the decade.
“HIA research shows that 59%of our small business members surveyed do not expect to increase profits this financial year compared to last,” said HIA chief executive of industry and policy, Simon Croft (pictured) in a media release.
“If businesses aren’t making reasonable returns, they lack the capital to take on new projects and reinvest in operations or staff to improve productivity – creating a cycle that’s hard to break.
“Many members report that high insurance costs, labour shortages, and persistent planning delays are limiting new work and investment decisions.
“Margins are expected to remain tight, with builders continuing to absorb higher labour, material and regulatory costs, while approval timeframes and financing constraints slow projects before they even start.”
Croft said lifting confidence and viability for small building firms must be central to governments’ housing strategies if national supply targets are to be met.
“Lifting confidence – and the viability of small businesses – in the building sector must be a priority if governments are serious about tackling Australia’s housing shortfall and meeting the target of 1.2 million homes," the HIA chief said.
“Governments can make an immediate difference by accelerating planning approvals, cutting unnecessary red tape, and supporting workforce growth across the construction sector.
“If confidence remains weak, fewer homes will be built. Improving conditions for builders is one of the fastest ways governments can help unlock new housing in 2026 and beyond.”
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