Australia’s housing construction industry is poised for a recovery in 2026, offering a glimmer of hope for Filipino-Australian families looking to enter the property market or build new homes. However, industry experts warn that the speed of this recovery hinges heavily on the trajectory of interest rates and inflation.
According to the latest data from the Housing Industry Association (HIA), a gradual rise in building approvals over the past year suggests that the next housing upswing is finally taking shape.
Improving approvals offer hope for buyers
HIA Senior Economist Tom Devitt noted that the foundations for a broader recovery are being laid after nearly a decade of underbuilding. Building approvals – a primary indicator of future construction activity – have trended upward following the interest rate cuts delivered in 2025.
Recent data shows a significant jump in activity compared to the same period two years ago:
- Standalone houses: Approvals increased by 10.1 per cent in the last three months.
- Multi-unit developments: Approvals surged by 36.4 per cent.
“We expect approvals to continue trending upward, which should translate into higher levels of home building activity through 2026, particularly once the impact of earlier rate cuts flows through to construction starts,” Mr Devitt said.
The inflation and interest rate challenge
Despite the positive outlook, inflation remains a hurdle to a rapid recovery. While the 2025 rate cuts provided a necessary tailwind, the consumer price index (CPI) for November showed an annual inflation rate of 3.2 per cent – slightly above the Reserve Bank of Australia’s (RBA) 2–3 per cent target.
Rising costs in electricity, property rates, and government excise taxes have kept inflation elevated. Mr Devitt warned that without further easing of borrowing costs, the recovery may be more gradual than the country requires, especially given Australia is currently short of its housing needs by nearly two million homes.
“This is the central challenge facing the housing market in 2026,” said Mr Devitt. “A constrained supply of new homes is adding to upward pressure on rents, prices and inflation itself, which in turn feeds back into higher interest rates.”
State-by-state breakdown: Where is activity growing?
For Filipino–Australians considering a move or investment interstate, the recovery is moving at different speeds. Western Australia and Queensland are currently leading the nation in new project approvals.
Building approvals increase (Last 3 months vs same quarter 2 years ago):
| State/Territory | Growth Percentage |
| Western Australia | +71.3% |
| Northern Territory | +68.1% |
| Queensland | +33.6% |
| South Australia | +29.2% |
| New South Wales | +24.6% |
| Victoria | +3.7% |
| Tasmania | +0.5% |
| ACT | -47.5% |
Impact on the Filipino-Australian community
The ongoing housing shortage continues to be a central challenge for the community. The HIA noted that the lack of new supply is a primary driver behind rising rents and property prices – factors that directly affect migrant families and first-home buyers.
The HIA suggests that for the 2026 recovery to reach its full potential, the government must focus on planning reform and lowering the taxes associated with delivering new homes.
“Lowering the cost of delivering new homes through planning reform, improved land supply and lower government charges will be critical if Australia is to lift housing supply without reigniting inflation,” concluded Mr Devitt.
What will happen to house prices in 2026?
This video from ABC News provides a deep dive into the 2026 housing market forecasts, which complements the HIA data by discussing how interest rate shifts and supply shortages are impacting Australian capital cities.
