27/08/2025
Time to read
3 mins

Quick take
The June 2025 quarter delivered stronger construction activity, led by engineering work, while July inflation spiked on electricity. For builders, residential demand looks steadier, non-residential is softer, and rates are still expected to stay on hold in September.

Key points for builders

  • Total construction work up 3.0% in the June quarter, now 4.8% higher year on year

  • Engineering construction up 6.1% in the quarter and 4.8% year on year

  • Residential building up 5.3% over the year, the highest workload since mid-2019

  • Non-residential building down 4.0% over the year

  • July headline inflation at 2.8%, the highest since July 2024, driven mainly by a 13.0% jump in electricity prices

  • Rental inflation easing to 3.9% year on year, the smallest rise since November 2022

  • Cost of new homes up only 0.4% over the year

  • Market expectation: the RBA is more likely to hold the cash rate in September

What it means on site

  • Pipeline mix: Prioritise capabilities and bids in engineering where momentum is strongest. Reassess exposure to slower non-residential segments.

  • Pricing and tenders: Factor higher electricity costs into prelims and overheads. Lock in supply where possible while new home cost growth is subdued.

  • Cash flow and contracts: Use cost-escalation and variation clauses to manage energy-linked spikes. Keep contingencies conservative on long-dated jobs.

  • Workforce planning: Residential trades demand likely to remain firm. Shift capacity toward infrastructure packages where feasible.

  • Financing: With rates likely on hold, consider timing equipment purchases and refinancing while conditions are stable.

At a glance

  • Construction work: +3.0% qoq, +4.8% yoy

  • Engineering: +6.1% qoq, +4.8% yoy

  • Residential building: +5.3% yoy

  • Non-residential building: −4.0% yoy

  • CPI July: 2.8%

  • Electricity prices July: +13.0% m-m

  • Rents: +3.9% yoy

  • New home costs: +0.4% yoy

Bottom line
Stronger engineering and steady housing work support workloads, but energy costs and a softer non-residential market demand tighter pricing, sharper risk controls, and selective tendering. Rates on hold would be a mild tailwind for project financing and buyer demand.