The sector is dealing with a messy mix of global and local pressures. Conflict in the Middle East is disrupting supply chains for major builders, lifting material costs and creating uncertainty around delivery times. At the same time, residential developers listed on the sharemarket are seeing their values sink in 2026, as investors factor in stubbornly high interest rates and the risk that housing projects become slower to sell or more expensive to complete.
Industry groups say the core problem is that new housing supply is still falling short of national targets, even after a lift in building activity late last year. Since the National Housing Accord was launched, Australia is estimated to have fallen behind by about 77,500 homes and now needs roughly 262,000 new dwellings each year until 2029 just to catch up. To close the gap, the sector is pushing for more flexible planning rules, stronger investment incentives, less red tape with cuts of at least a quarter in mind, along with clearer training pathways for apprentices and a more open approach to skilled migration.
If these proposals gain traction, the housing market could see a wave of new, smaller-lot developments that look to balance affordability with density, potentially easing pressure on buyers over time. However, the outcome still depends on how governments respond, how quickly planning changes flow through to actual projects and whether global tensions and funding conditions stabilise enough for builders and developers to confidently scale up construction.
