Building Approvals for July 2026 shows that persistently high inflation is increasingly weighing on residential building activity.

Approvals for detached houses in NSW fell bv 4% in July and by 8.1% for all dwellings, Across the nation the number of new dwellings approved fell by 3.6% and the fall in approvals for detached housing was even higher at 4.2%.

Matthew Pollock, CEO of Master Builders NSW said that “While we can’t overreact to monthly approvals data, the numbers for July show that approvals for detached dwellings have fallen in every state where the data is collected.”

“Approvals rarely decline consistently across all jurisdictions in the same period due to local factors. We should be concerned if the July results mean that stubbornly high inflation is further strengthening its malign grip on the housing sector,” he said.

“The latest Consumer Price Index (CPI) data for July confirms that inflationary pressures remain deeply entrenched across the Australian economy, with underlying inflation showing little sign of easing despite a modest decline in the headline rate. The ABS reported annual CPI of 3.5 per cent in July, down from 3.8 per cent in June, while the Reserve Bank's preferred measure of underlying inflation, the trimmed mean, remained unchanged at 3.6 per cent.” Matthew Pollock said.

"The underlying inflation remains stuck at 3.6 per cent and accelerated strongly through July demonstrates that price pressures have not gone away. In fact, they appear to be strengthening, “he said.  

“The persistence of elevated underlying inflation is minimising the impact of higher interest rates and keeping the cost of borrowing higher for longer eroding the confidence of both home builders and prospective buyers,” Matthew Pollock said.

“Construction businesses continue to face elevated labour, materials, financing and compliance costs, while persistent inflation increases the likelihood of further monetary policy tightening,” he said.

"Inflation has become the number one factor affecting project feasibility across the industry. Every additional cost increase pushes more projects below the viability line and reduces the number of homes, apartments and commercial projects that can be got out of the ground,” Matthew Pollock said.

“Housing costs remain a major contributor to inflation, reflecting ongoing increases in new dwelling construction costs as builders continue to face higher labour and material expenses," he said.

“Federal Government policies are contributing to building firms being squeezed from all sides. The latest Average Weekly Earnings data shows that despite wage increases household income is not keeping pace with inflation,” Matthew Pollock said

“The worry is that people are simply running out of cash to invest in building services,” Matthew Pollock said.  

Media contact: Ben Carter | Head of Government Relations, Marketing & Corporate Affairs | 0447 775 507 | bcarter@mbansw.asn.au