News - October 2025

The Australian construction industry continues to experience a split between a residential sector gaining momentum and a small-to-medium enterprise (SME) segment still battling severe financial stress.

Here are the top four stories and major themes from the sector in October:

1. 🚀 Continued Surge in Residential Sales Momentum

The positive trend established in September was sustained in October, giving the residential segment its highest activity levels in years.

• The Data: Following the September spike, forward indicators for new home construction remain strong. The earlier surge was largely attributed to the removal of Lenders Mortgage Insurance (LMI) for first-home buyers and August's cash rate cut, policies that are now clearly flowing through to sales contracts.

• The Outlook: This has created a strong forward pipeline for volume builders, though the consensus remains that the industry is still falling well short of the 1.2 million home target set by the Federal Government, primarily due to capacity constraints.

2. 📉 Focus on the Declining Rate of Housing Completions

Despite the high number of new home sales, official data released in the month paints a worrying picture of the actual delivery of housing.

• Completion Shortfall: The ABS data for the June Quarter 2025 (released in October) highlights that total dwelling completions for the first year of the government's Housing Accord (FY2025) has fallen by 2% to approximately 174,000. This means the first year of the 240,000-per-annum target was missed by over 65,000 homes.

• The Cause: This shortfall was largely attributed to a combination of structurally higher interest rates, construction costs that have risen over 40% since the pandemic, and persistent labour/apprentice shortages that are slowing down the completion of current work.

3. 🛡️ Industry Pushes for Action on the SME Insolvency Crisis

Insolvency remains the industry's most significant vulnerability, forcing peak bodies and governments to address the root causes for small and medium businesses.

• Persistent Failures: The construction sector continues to account for the highest number of corporate insolvencies in Australia. Firms entering administration were suffering from the squeeze of fixed-price contracts signed in 2021–2022 colliding with continued cost escalations and a lack of cash flow.

• Policy Focus: Major industry figures are calling for government and regulator intervention to address "phoenixing" (where directors intentionally collapse one company to avoid debt and start a new one) and implement stricter minimum payment terms for subcontractors to protect cash flow.

4. 👷‍♀️ Sustainability and Technology Take Centre Stage for Future Compliance

The impending transition to the new National Construction Code (NCC 2025) dominated technical and training discussions.

• New Standards: Builders and developers are focusing heavily on training and compliance for the new NCC 2025 standards, which mandate 7-Star NatHERS energy efficiency ratings for new homes and updated safety and accessibility standards.

• Modern Methods: There was increased focus on Modern Methods of Construction (MMC), such as modular, prefabrication, and the use of green concrete/Cross-Laminated Timber (CLT), driven by the need to meet the new energy targets while simultaneously combatting labour shortages and speed up delivery.