GDP grows 0.4% as dwelling investment rises and fuel costs push up construction prices

Australia’s economy grew 0.4% in the June quarter of 2026, and 2.1% over the year, according to the national accounts released by the Australian Bureau of Statistics on 2 September. For the building industry, two things stand out: dwelling investment picked up, and construction was singled out as one of the industries hit hardest by higher input costs from the Middle East conflict.

Dwelling investment picks up

Treasurer Jim Chalmers said dwelling investment grew 1.6% in the quarter, to be 5.8% higher over the year, up from 1.5% and 4.2% respectively in the March quarter. He described the growth as having picked up and broadened. That is consistent with other data showing a record number of dwellings under construction and residential building work done rising in the June quarter.

Dwelling investment in the national accounts measures spending on new homes and alterations and additions. Like construction work done, it reflects work in progress, so it captures the large pipeline of homes the industry is working through, rather than new sales.

Costs: construction in the spotlight

The ABS said domestic price growth in the quarter reflected rising input costs across most of the economy as oil prices rose because of the conflict in the Middle East. It said higher input costs predominantly affected energy and fuel-intensive industries, including construction, mining, manufacturing and transport, postal and warehousing. It also noted that construction continued to experience price rises due to ongoing competition for limited resources in both labour and materials.

The ABS noted that a temporary reduction in fuel excise helped moderate consumer prices during the quarter.

Master Builders Australia chief executive Denita Wawn said the figures reflected what builders had been telling the Government, with labour shortages and costs escalating to more than 50% above pre-pandemic levels. She said building materials inflation was at a three-year high and that apprenticeship numbers had fallen to a five-year low, and she criticised Budget measures affecting apprenticeship funding. Master Builders also noted that productivity across the economy was flat in the quarter.

Households under pressure

The Treasurer noted that mortgage interest costs rose 10.4% in the quarter, reflecting this year’s interest rate increases, and said the full impact of the rises would flow through in future quarters. Household consumption grew 0.4% in the quarter. For builders, higher mortgage costs are part of the reason new home demand is softening even as work in progress remains strong.

What it means for builders

A busy present and a cautious future

The national accounts, like the construction work done figures last week, describe an industry working hard through a large pipeline. The forward indicators are softer: July approvals fell, house approvals dropped in every state, and the Reserve Bank has noted a decline in new housing loans. Builders should expect strong workloads on existing jobs to continue while new contracts slow.

Cost pressure is real and broad

The ABS’s explicit mention of construction as an industry affected by fuel costs and competition for labour and materials confirms what builders see in supplier price lists and trade quotes. Pricing new work at current costs, with realistic allowances for movement over the job, remains essential. Fixed-price contracts signed at last year’s prices are where margins are being lost.

Workforce

Master Builders’ comments on apprenticeships and labour shortages echo HIA’s trades report from July, which found shortages entrenched and trade prices rising. The Government’s Key Apprenticeship Program has lifted housing construction apprentice commencements, but the overall trade pipeline remains a constraint on how quickly the industry can build.

What the national accounts measure

The national accounts are the broadest picture of the economy: all production, spending and income, quarter by quarter. Dwelling investment is the part that covers new housing and alterations and additions. It is measured in volume terms, adjusted for price changes, which makes it a better guide to real activity than figures measured in dollars alone. The national accounts also track prices across industries, which is why the ABS was able to identify construction as one of the sectors most affected by higher fuel and input costs this quarter.

Reading this alongside other data

Taken together, the releases of the past fortnight tell a consistent story. Construction work done showed residential building rising in value in the June quarter. The national accounts show dwelling investment growing in real terms. The National Housing Supply and Affordability Council found a record number of dwellings under construction and costs 51% above pre-COVID levels. And July building approvals fell, with houses down in every state. The industry is busy completing a large pipeline while new demand softens and costs keep rising.

For builders, that combination rewards discipline: finishing jobs well and getting paid, pricing new work at today’s costs, keeping good trades, and watching cash flow as the intake of new work slows.

Why the fuel excise cut matters to builders

The ABS noted a temporary reduction in fuel excise helped moderate consumer prices in the quarter. For builders, fuel is an input at almost every stage: quarrying and manufacturing materials, freight, plant, and the trades’ own vehicles. Any change in fuel prices, including when temporary excise relief ends, will flow into supplier prices and trade rates. It is one more reason to keep quote validity periods short and to check supplier prices before signing fixed-price contracts.

The policy debate

Master Builders used the release to repeat calls for Government action on construction costs, the supply of compliant building products from overseas, skilled migration and apprenticeships. The Treasurer pointed to the pick-up in dwelling investment and building approvals holding up as encouraging signs. Both are true at once: activity is solid, and the pressures on builders are real. How governments respond will shape the pipeline into 2027.

What to watch

• The Reserve Bank’s decision on 28 and 29 September, and whether the national accounts change its view on inflation and demand.
• Consumer price inflation data, including new dwelling costs, which track builders’ prices.
• August building approvals, due in early October.

Questions builders ask

• ABS data
• Construction costs
• Housing supply
• Interest rates

Published 3 September 2026. General information for builders, not legal, financial or engineering advice for a specific job. Check current requirements with the relevant regulator or standard before relying on them.