NAB’s June quarter survey of property professionals puts construction costs further ahead of everything else than at any point in the recent run of this series. What moved underneath the headline number matters more than the number itself.

Seventy seven per cent of property professionals surveyed by NAB in the June quarter named construction costs as the main barrier to starting new housing developments. In March it was 65 per cent. That is a twelve point jump in a single quarter, and it puts cost further clear of the field than anything else on the list has been in recent rounds.

The more interesting movement happened underneath. Delays getting planning permits, the perennial number two, fell to 45 per cent from 53. Concern about interest rates climbed to 39.6 per cent. And labour availability, the constraint this industry has talked about more than any other for five years, sits at 30.2 per cent.

Fourth.

For a sector that has spent half a decade describing its central problem as a shortage of trades, that is a genuine inversion. It is worth being precise about what it does and does not mean.

Who is actually answering this survey

This matters before any of the numbers do. The NAB Residential Property Survey does not poll builders. Its panel is made up of real estate agents and managers, property developers, asset and fund managers, and owners and investors. Around 244 of them took part in the June quarter round, which ran from 26 May to 23 June.

So the finding is not builders reporting on their own constraints. It is the demand side of the market reporting on what it observes about builders. That is a different measurement, and for a builder it is arguably the more useful one, because these are the people selling the product, funding the project, or deciding whether a site stacks up at all.

It also explains the labour reading. An agent does not feel a chippy shortage the way a site supervisor does. What an agent feels is a price that will not come down. Read that way, 30.2 per cent on labour is not evidence the trade shortage has eased. It is evidence that from the outside, the shortage now presents as a cost problem rather than a scheduling one.

The state picture is not the national one

Construction costs led the barrier list in every state. The margins were nowhere near the same. New South Wales sat at 92 per cent, Victoria at 79, Western Australia at 78 and Queensland at 67.

Nine in ten respondents in New South Wales, two in three in Queensland. That is a wide spread for a single input. Victoria was the only state where interest rates ranked second, at 64 per cent. Everywhere else, permit delays took that position.

Queensland’s outlier sits elsewhere. Lack of development sites was named by 42 per cent of Queensland respondents, the highest of any state and well ahead of Western Australia at 22 per cent, New South Wales at 15 and Victoria at 7. For anyone working the South East Queensland corridors that will not be news, but it is independent corroboration of what land supply data has been saying about the region for the past year, from a panel with no reason to agree with it.

Labour availability shows the widest state spread of any barrier, running from 17 per cent in Queensland to 44 per cent in Western Australia, with New South Wales at 38 and Victoria at 21. Queensland recording the lowest labour concern in the country is hard to reconcile with where labour cost escalation is forecast to bite hardest this year. It is a reminder that this survey measures perception, not capacity.

Sentiment fell hard, but not evenly

The headline NAB Residential Property Index dropped to plus 14 in June from plus 58 in March. That takes it back below its long run average of plus 22 and ends five consecutive quarters of above average readings.

Victoria went negative at minus 3, down from plus 37. New South Wales barely held positive at plus 3, down from plus 57. Queensland fell from 68 to 24, a heavy drop in absolute terms, though it remains the third strongest state reading and sits well clear of the two largest markets.

The survey ran after the Federal Budget, and NAB reports respondents attributing higher rents, lower house prices and reduced investor activity to the tax changes announced in it. NAB also links the rise in construction cost concern to higher material costs flowing from the Middle East energy price shock. That is NAB’s causal reading rather than settled fact, and it is worth holding lightly given the evidence that fuel driven material costs have started to settle. Perception in a quarterly survey tends to lag the invoice.

Rents are forecast up while prices are forecast down

The two forecasts in this survey point in opposite directions, and the gap between them is where the commercial consequences sit.

Respondents expect national house prices to fall 2.5 per cent over the next twelve months, revised down from an expected rise of 2.1 per cent in March. Over two years they expect a fall of 0.9 per cent. Rents, meanwhile, are expected to rise 3.9 per cent over twelve months and 4.3 per cent over two years. Queensland rent expectations run higher again, at 4.6 and 5.4 per cent.

Falling capital values alongside rising rents changes the arithmetic on investor grade product. It improves the yield and weakens the growth case at the same time. For anyone building spec stock, dual occupancy or small scale investor product, that combination reshapes who the likely buyer is and what they are prepared to pay.

The buyer mix is shifting under new home builders

In new developments, local investors accounted for 14.8 per cent of sales in the June quarter, down from 19.9 in March. Foreign buyers rose to 7.7 per cent from 4.4, concentrated in Victoria at 14.2 per cent. First home buyers eased to 38.6 per cent from 40.7, while owner occupiers net of first home buyers rose to 37.8 per cent from 34.1.

Expectations for the next twelve months point the same way. Respondents put the change in local investor share at a net minus 11 and foreign buyer share at a net minus 15.

The investor buyer is thinning and the owner occupier is thickening. Those are different customers. Different product expectations, different sales cycles, different deposit and finance profiles, and a very different tolerance for a build programme that slips.

What the survey does not settle

Two limits are worth stating plainly. The national sample is 244, and every state figure in the document is a subset of that. South Australia’s new development buyer breakdown is blank in NAB’s own tables, which is a straightforward signal the sample was too thin to publish. The ACT and Northern Territory readings move in ways no other jurisdiction does, with the ACT index swinging from minus 25 to plus 75 in a quarter while every other state fell. Neither is treated as comparable here.

The second limit is a matter of series. NAB reports Cotality dwelling price movements alongside the survey findings on the same page. They are not the same measure. Cotality figures are administrative index data. The price forecasts are survey expectations. They do not belong on one line.

The reordering is the finding

Strip it back and the useful thing here is not that construction costs are high. Every builder in the country already knows that. It is that the people who sell, fund and assess new housing now put cost so far ahead of everything else that permits, rates and labour have become secondary considerations in how they explain why projects do not start.

That has a practical edge to it. When a developer or a financier accounts for a stalled project, cost is now the language they reach for first. A builder walking into that conversation with a programme argument or a trades argument is answering a question that is no longer the one being asked.

Where those costs are actually moving is a separate question, and the recent picture is more mixed than a single survey quarter suggests. But perception has hardened, and perception is what sits on the other side of the table when the next project gets priced.

The Good Builder tracks the data that changes decisions, not the headlines that chase clicks. For more on where the market is heading and what it means for your business, follow The Good Builder and tune in to the podcast.pends entirely on how many of Queensland’s 77 councils actually take it up. A statewide code that three quarters of councils adopt is a genuine simplification. A statewide code that a third adopt is a fourth layer on top of an already fragmented system. Three years from now, the adoption count is the only number that will tell you which of those Queensland got.

Frequently asked questions

Figures in this article are drawn from the NAB Residential Property Survey Q2 2026. This article is general information only and does not take into account your objectives, financial situation or needs. It is not financial, legal or professional advice and should not be relied on as such.

Author: TGB Editorial