Recent years have seen the emergence of a significant supply dislocation in Australia’s residential construction market. Australia’s residential construction pipeline expanded sharply after COVID. HomeBuilder stimulated a surge in starts, while trade and material shortages, weather disruptions and builder insolvencies slowed delivery during 2021–2023.
Before COVID, the pipeline was broadly balanced. Across FY2017–FY2019, commencements and completions each averaged around 216,000 dwellings annually, allowing for the normal lag between starts and finishes.
Since then, commencements peaked at around 229,000 dwellings in 2021, before turning down and now recovering to 204,400 in FY2026. However, annual completions been flat at 173,000 and 181,000 per annum. By June 2026, a record 247,700 dwellings were under construction, up from 184,000 in June 2020. More homes are in progress, but completions have not kept pace.
The shortfall is particularly evident in other dwellings, including apartments, townhouses and villas. The 71,500 dwellings completed in FY2026 were 28% below the pre-COVID average, while 152,300 were under construction. That represents 2.13 years of completions, compared with an average 1.52 years across FY2017–FY2019. The higher ratio points to weaker throughput, although project mix and normal construction lags also matter.
Houses show a similar, although less pronounced, pattern. Commencements declined sharply after the HomeBuilder peak, but the stock under construction fell only partly and has risen again as starts recovered.
Persistently subdued completions alongside elevated work in progress suggest a delivery constraint, and possibly a capacity ceiling. Housing also competes with other construction sectors for some labour and materials. In the June quarter of 2026, non-residential building and engineering construction work totalled approximately $18 billion and $37 billion, respectively. Infrastructure Australia’s 2025 Market Capacity Report identified a $242 billion major public infrastructure pipeline for 2024/25 to 2028/29. Trade requirements differ by sector, but competing activity is likely to be one of the constraints on residential construction capacity.
The scale and likely causes of these pressures differ considerably between states.
State and Territory Performance
New South Wales
NSW completed 49,500 dwellings in FY2026, 27% below its pre-COVID average. Both house and other-dwelling completions remain subdued, despite a recent rebound in units. At 78,200, dwellings under construction are slightly below pre-COVID levels. Weak commencements and project viability therefore appear to be more significant immediate obstacles than clearing a construction backlog.
Victoria
Victoria completed 56,200 dwellings in FY2026, 14% below its pre-COVID average. House completions of 34,400 have broadly matched or exceeded commencements since FY2024, easing the construction pipeline. Other-dwelling completions remain 25% below pre-COVID levels, although the 41,400 units under construction represent almost 1.9 years of completions, against roughly 1.5 years previously. A healthy transport and non-residential project pipeline may also be competing for trades and materials used in apartment construction.
Queensland
Queensland shows pronounced delivery pressure. Despite 45,900 commencements in FY2026, only 34,600 dwellings were completed, while the stock under construction rose to 52,400, 58% above its pre-COVID average. Unit completions are 40% below the earlier average, even as 34,100 units are under construction. The latest surge in starts could extend delays unless completions accelerate. Transport, utilities and Olympics-related projects are also likely to increasingly add to competition for construction resources.
South Australia
South Australia stands out for completed housing. Its 13,600 completions in FY2026 were 25% above the pre-COVID average, reflecting gains in both houses and units. Commencements rose further, to 15,400, taking dwellings under construction to 15,800. Unlike most states, stronger starts have been accompanied by stronger completions, although a watching briefs is required and defence and infrastructure activity tests the capacity of its relatively small workforce.
Western Australia
Western Australia has generated considerably more construction activity without a sustained increase in completions. FY2026 commencements reached 25,500 dwellings, 43% above pre-COVID levels. In contrast, completions fell by nearly 3,000 from FY2025 to 19,600. Dwellings under construction have more than doubled since June 2020 to 29,000 in line with rising starts since 2023, however, the improvement in completions reversed in FY2026. Resource, industrial and civil projects will be adding to pressure on trades and contractors and pushing out construction timeframes.
Tasmania
Tasmania completed around 2,350 dwellings in FY2026, slightly below its pre-COVID average. House building has held up reasonably well, but other-dwelling completions have more than halved. The construction pipeline has eased from its 2021 peak, although it edged higher in FY2026. The state's small workforce offers limited flexibility when public works and energy projects need specialist trades. The proposed Hobart Stadium could add to competition for contractors and materials and impact residential construction.
Northern Territory
The Northern Territory completed around 720 dwellings in FY2026, 26% below its pre-COVID average, reflecting weakness in its small unit market. Its construction pipeline remains relatively modest. Activity is volatile, while resource and transport projects can absorb a significant share of the available trades and contractors.
Australian Capital Territory
Completions of around 3,800 dwellings in the Australian Capital Territory are 17% below the pre-COVID average, despite close to 4,900 commencements. Completions have largely kept pace with commencements. The housing pipeline has eased, while units under construction remain similar to pre-COIVD levels, Units dominate delivery, but the apartment pipeline has not produced consistently higher completions. The stop-start nature of large projects and competition from public and non-residential construction remain relevant constraints.
The biggest challenges appear to be in the largest states. The pipeline in New South Wales and Victoria has eased, but there is a risk that capacity pressures re-emerge in New South Wales and Victoria once their markets recover. Meanwhile, the residential construction backlog in Queensland and Western Australia will remain challenged due to the strength of new dwelling commencements alongside competing pressures from the non-residential building sector. At this stage, the smaller states seem to be managing their residential pipelines.
A Structural Shift in Housing Delivery Capacity?
A persistently high stock of dwellings under construction relative to completions suggests longer construction times, but is this change cyclical or structural?
Labour shortages and competing workloads may be enduring. Infrastructure, energy, defence and non-residential projects draw on some of the same trades and materials as housing.
ABS analysis found average house construction times rose from 2.2 quarters before COVID to 3.3 by June 2024. The Productivity Commission has identified lower productivity in the residential construction sector, with longer build times requiring a larger pipeline to sustain a given completion rate.
If capacity constraints persist, annual completions could remain around 180,000 dwellings despite the higher commencements we saw in FY2026, resulting in a further accumulation of unfinished housing and increasingly extended construction timeframes.
Time will tell whether the elevated pipeline becomes entrenched and if the larger construction pipeline is not a temporary backlog but reflects a more persistent deterioration in the industry's capacity to deliver completed housing.
Ultimately, without improvements in construction productivity and industry capacity, higher commencements alone may do little to lift annual dwelling supply and more will be required to ensure the construction industry has the ability to convert housing starts into completed dwellings at the speed previously achieved.
If Australia is to meaningfully increase housing supply, we need to look beyond approvals and commencements to understand the constraints on actual delivery. At Quantify Strategic Insights, we help developers, policymakers and industry participants make sense of housing market trends, construction pipelines and future supply capacity. Contact Angie Zigomanis ([email protected]) or Rob Burgess ([email protected]) to discuss how our research and forecasting can support more informed housing decisions.
