The Hard Part of Building Now Is Finishing the Job

If you only read the headline housing numbers, construction in Australia looks like it is finally turning the corner. Approvals are up, starts are up and more homes are being built than at any time on record. I think the more useful story sits underneath those headlines, in how much it now costs to get a project from the first slab to the last handover.

What the data shows

The Good Builder pulled the latest ABS datasets together earlier this month, and the picture is worth reading slowly. Australia approved 208,184 dwellings in the twelve months to August, up 9.5 per cent. Over the four quarters to June, 204,440 dwellings were started, 13.4 per cent more than the year before. Over the same period, 180,500 were completed, up just 2.8 per cent.

That works out to about 88 homes finished for every 100 started, down from about 97 a year earlier. The difference does not disappear. It builds up as work in progress. At the end of June, 248,733 dwellings were under construction, the most in an ABS series that goes back to 1984.

Apartments are the slow part. The average apartment took around 29 months from start to finish in 2025 to 2026, the longest in the series. Houses are getting quicker, at a little over eight months, but that is cold comfort for a project that runs for two years and more.

Costs are still moving

At the same time, the price of building keeps climbing. ABS producer price data shows the prices house builders charge rose 5.9 per cent in the year to the June quarter, the largest annual rise since 2023. Materials rose 3.8 per cent, with copper pipes and fittings up 25.1 per cent and electrical cable up 16.3 per cent. The ABS linked the rise to raw material, freight and fuel costs tied to the Middle East conflict.

Those pressures are still arriving. Since 15 October, importers of Chinese aluminium windows and doors caught by a dumping investigation have had to lodge securities of between 5.3 and 73.3 per cent of the value of the goods at the border, before any duty has been decided. For a builder with imported windows going into a job priced months ago, that is a cost turning up after the price was locked in.

Looking forward, quantity surveyor RLB, as reported by API Magazine, is forecasting tender price growth of 5 per cent in Brisbane and 5.5 per cent on the Gold Coast during 2026. Build Metric told the magazine that typical residential builder margins sit around 5 to 10 per cent, and that 63 per cent of Master Builders Victoria members are on fixed-price contracts that stop them passing on material and fuel increases. Put those numbers side by side and it does not take much escalation over a long build to erase a margin.

Why it matters for credit

The RBA's October Financial Stability Review describes construction insolvencies as elevated, partly because of the thin margins in the sector. ASIC data shows 3,472 construction companies entered external administration for the first time in 2025 to 2026, 24.5 per cent of all company insolvencies. That was slightly fewer than the year before, but this year's count is already distorted by one large builder and developer whose group put 540 companies into administration on a single day in August.

The RBA's view is that the wider system is sound, and that this collapse reflected firm-specific risk-taking. I agree that it is not a systemic story. But the same review makes two points I think matter for anyone involved in funding projects. First, higher construction costs have shrunk the pool of feasible projects, so lenders are competing hard for the ones that still stack up. Second, for private credit there has been some tightening and more sensitivity to project risk, which may affect funding for some residential developers.

In practice, that means the questions being asked of a project are changing. It is less about whether the end value supports the loan on day one, and more about whether the budget, the builder and the timeline can hold for the full build. A builder failure mid-project leaves subcontractors unpaid and the developer looking for a replacement at today's prices, not last year's. Delay alone adds interest and holding costs, and pushes settlements further out.

What I am watching

First, completions against starts. If the ratio of homes finished to homes started climbs back toward 100, the pipeline is clearing. If it keeps falling, more capital is sitting in unfinished buildings.

Second, the September quarter insolvency figures, which the RBA expects to spike temporarily because of that one large administration. The underlying count, excluding it, is the better signal.

Third, the Q3 CPI on 28 October, which will show whether new dwelling costs are still feeding inflation and, with it, the path for rates.

My own view is that Australia's housing problem is no longer mainly about approvals. It is about getting what has been started finished, at a cost that still works. That is where the risk sits for builders, developers and the people who fund them.

None of this is a recommendation to borrow, lend, build or invest. Everyone's position is different.

Sources

The Good Builder, The construction data nobody sees is starting to tell a different story (ABS building activity, PPI and ASIC data, updated 7 Oct 2026)

API Magazine, The second wave of construction insolvencies is coming (7 Oct 2026)

RBA, Financial Stability Review October 2026, Resilience of Australian Households and Businesses

Cyberate, Australian construction insolvencies FY2025-26 (updated 16 Oct 2026)

The Good Builder, Imported aluminium windows now carry securities (20 Oct 2026)

ABC News, Australia has a housing shortage. So why are home builders collapsing? (8 Sep 2026)

Personal views, not financial advice.