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The Reserve Bank\u2019s latest decision to hike the cash rate to a 15-year high of 4.6 per cent has sparked fresh concerns for Australia\u2019s housing supply. Picture: NewsWire \/ Martin Ollman<\/p>\n
\u201cWhat this means is that there is little margin for error left in the current climate. <\/p>\n
\u201ciCIRT Construction Index data shows 35 per cent of Australians managing a build or renovation cannot absorb a project cost increase of just 1 to 5 per cent \u2013 a precarious position given our data shows that only 23 per cent of new builds or renovations are actually finishing on schedule. <\/p>\n
\u201cIn this environment, independent due diligence through tools like iCIRT are not a nice-to-have, but an essential safeguard for consumers before engaging construction professionals.\u201d<\/p>\n
Mr Walters said higher interest rates for longer will continue to pile pressure on the construction industry that is critical to Australia\u2019s economy.<\/p>\n
\u201cFrom an industry perspective, because so many construction projects are debt-funded, as the cost of debt increases, project feasibility reduces \u2013 meaning fewer projects progress,\u201d he said.<\/p>\n
\u201cThis is exacerbated given that construction costs have been rising faster than prices, eroding margins, and higher debt costs only place greater pressure on the industry.\u201d<\/p>\n
Mr Walters said strain is already being felt for small construction businesses.<\/p>\n
\u201cEquifax data shows that subcontractor capacity has effectively stalled already under this strain, with small construction business exits surging 58 per cent in Q2 2026 against a 19 per cent drop in new entrants,\u201d he said.<\/p>\n
\u201cGiven the multiplier effect the construction industry has across the economy, this is likely to impact national housing supply targets, leaving buyers to face longer delays and fewer new builds entering the market.\u201d<\/p>\n
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iCIRT Construction Index data shows 35 per cent of Australians managing a build or renovation cannot absorb a project cost increase of just 1 to 5 per cent. Picture: NCA NewsWire\/ Gaye Gerard<\/p>\n
Housing Industry Association Executive Director Brad Armitage said interest rate rises essentially mean that less homes will be built. <\/p>\n
\u201cThe more expensive it is to build or potentially expensive, mums and dads just hold off on making that commitment and signing the contract,\u201d he said.<\/p>\n
\u201cWe\u2019re seeing new home sales down across the country by 20 per cent, we\u2019re seeing data that says display home traffic is down as well. <\/p>\n
\u201cWe\u2019re also hearing from our members that a lot of families are struggling to get the finance that they need to build what they want and that\u2019s because of the serviceability buffers that exist. <\/p>\n
\u201cThat issue is going to be further exacerbated by the interest rate rises, which again, means less new homes being built, less renovations and additions as well.\u201d<\/p>\n
Mr Armitage said this added affordability strain is coupled with already significant increases to the cost of shovel ready or serviced land over the last decade. <\/p>\n
\u201cThat\u2019s especially true in the Sydney market where a relatively small block of land can cost upwards of $600,000,\u201d he said.<\/p>\n