Australia’s data centre build-out is now so strong that the Reserve Bank warns it is pulling workers and resources away from other construction projects, including housing.
At the same time, the central bank links recent tax changes under the Labor government to a sharper housing market slowdown, adding another drag.
Officials raise these concerns as financial markets scale back expectations of further interest rate hikes.
Inflation came in weaker than predicted, but the RBA argues the outcome is still broadly consistent with its plans.
Central bank economists had assumed the data centre boom would pause after several quarters of rapid expansion, easing pressure on builders and trades.
Instead, investment momentum accelerated in early 2026, defying those expectations.
Data from the Australian Bureau of Statistics shows equipment investment across the information technology sector jumped 126% in the March quarter.
That surge lifted spending to $5.2 billion, a figure large enough to move the needle for the wider construction and investment landscape.
A simple mechanical problem sits behind the warning, the construction industry cannot easily ramp up capacity when multiple big capital projects hit at once.
Data centres require highly specialised electrical, mechanical and fit-out work, which overlaps with skills needed for residential and commercial building.
When these facilities soak up contractors and materials, housing projects can slow and costs can rise, deepening an already visible market downturn shaped by tax settings.
RBA officials stress that, even though inflation is slightly softer than forecast, these sectoral bottlenecks still matter for policy decisions.
