ABS December 2025 preliminary figures show diverging conditions across sectors and states

Australia’s construction sector ended 2025 broadly steady in headline terms, but the underlying detail tells a more nuanced story.

According to the latest preliminary release from the Australian Bureau of Statistics, total construction work done fell 0.1 per cent in seasonally adjusted terms in the December quarter to $80.0 billion. However, building activity continued to climb, offsetting weakness in engineering construction.

The trend measure, which smooths quarterly volatility, rose 1.5 per cent to $80.2 billion, suggesting the broader direction of the industry remains positive despite short-term fluctuations.

For builders, suppliers and policymakers, the split between residential, non-residential and engineering activity will be the more important signal heading into 2026.

Building Work Drives Growth

Building work rose 0.9 per cent in the December quarter to $44.1 billion in seasonally adjusted chain volume terms. That represents an 8.1 per cent increase compared with the same quarter a year earlier.

Both residential and non-residential construction contributed to the rise:

• Residential building increased 1.0 per cent for the quarter and is 8.0 per cent higher year-on-year.
• Non-residential building rose 0.7 per cent for the quarter and is up 8.2 per cent over the year.

On a trend basis, total building work rose 2.4 per cent in the quarter, with both residential and non-residential segments recording trend growth of just over 2 per cent.

In simple terms: building activity is expanding at a healthy annual pace, even if quarterly movements are modest.

For residential builders, the 8 per cent annual increase suggests that despite feasibility pressures, labour constraints and financing challenges, work is still flowing through the pipeline. It also indicates that projects approved over the past two years are continuing to move into construction, albeit at a measured pace.

Non-residential building, often tied to commercial confidence, education, health and private investment cycles, is tracking at a similar growth rate. That suggests broader economic activity remains supportive of construction demand.

Engineering Construction Retreats

In contrast, engineering construction fell 1.3 per cent in the December quarter to $35.9 billion. It is now 2.7 per cent lower than the same time last year.

On a trend basis, engineering work rose slightly, up 0.5 per cent for the quarter, but remains 1.5 per cent lower year-on-year.

Engineering construction includes large-scale infrastructure, utilities, transport and resources-related projects. Movements in this segment are often influenced by major public infrastructure programs and resource investment cycles.

The quarterly fall may reflect the completion of large projects or timing effects in the delivery of infrastructure works. Because engineering projects are typically high-value and lumpy, quarterly movements can be more volatile than in residential construction.

However, the annual decline indicates that infrastructure momentum is not currently accelerating at the same pace as building activity.

National Picture: $80 Billion Quarter

The December quarter delivered $80.0 billion in total construction work done in seasonally adjusted chain volume terms.

Breaking that down:

• Building: $44.1 billion
• Engineering: $35.9 billion
• Total construction: $80.0 billion

On a year-on-year basis, total construction work is 3.0 per cent higher than December 2024 in seasonally adjusted terms, and 3.7 per cent higher on a trend basis.

That tells us two things.

First, the sector is still larger in real terms than it was a year ago.

Second, growth is being driven almost entirely by building work rather than engineering.

For an industry that has been balancing housing targets, infrastructure commitments and supply chain pressures, that shift in composition matters.

State and Territory Breakdown

The ABS data also reveals significant variation across states and territories.

Total construction work done rose in:

• New South Wales: up 1.5 per cent for the quarter, 3.4 per cent year-on-year
• Victoria: up 0.9 per cent for the quarter, 0.9 per cent year-on-year
• South Australia: up 2.3 per cent for the quarter, 19.9 per cent year-on-year
• Tasmania: up 0.3 per cent for the quarter

Construction work fell in:

• Queensland: down 1.1 per cent for the quarter, though still 6.4 per cent higher year-on-year
• Western Australia: down 1.7 per cent for the quarter, 1.9 per cent lower year-on-year
• Northern Territory: down 11.4 per cent for the quarter, 14.2 per cent lower year-on-year
• Australian Capital Territory: down 16.3 per cent for the quarter

South Australia stands out with nearly 20 per cent annual growth, reflecting strong activity across residential and non-residential projects. Queensland, despite a quarterly dip, remains solid over the year.

The Northern Territory and ACT figures highlight the volatility that smaller markets can experience when major projects commence or conclude.

For national builders and suppliers operating across multiple jurisdictions, the message is clear: conditions are not uniform. Market selection and geographic exposure continue to matter.

What the Trend Data Suggests

Quarterly seasonally adjusted figures can move sharply due to timing effects. That is why the ABS also publishes trend estimates.

In the December quarter:

• Total construction trend rose 1.5 per cent.
• Building trend rose 2.4 per cent.
• Residential trend rose 2.3 per cent.
• Non-residential trend rose 2.4 per cent.
• Engineering trend rose 0.5 per cent.

The trend data indicates underlying momentum remains positive, particularly in building.

For policymakers aiming to boost housing supply, the steady upward trend in residential construction is a welcome sign. However, the pace of growth will need to accelerate significantly if national housing targets are to be met over the coming years.

Preliminary Nature of the Data

It is important to note that these figures are preliminary.

The ABS reports that approximately 80 per cent of surveyed construction entities had responded at the time of release. The data will be revised in the forthcoming Engineering Construction Activity release on 25 March 2026 and Building Activity release on 8 April 2026.

The statistics are compiled from the Building Activity Survey and the Engineering Construction Survey and include:

• Approved building work greater than $10,000
• All engineering construction work undertaken in Australia

Because the figures are expressed in chain volume terms, they measure real changes in activity, adjusted for price movements, rather than nominal dollar values.

Implications for 2026

The December quarter closes out a year in which construction has remained resilient despite cost pressures, regulatory adjustments and broader economic uncertainty.

Three key themes emerge:

1. Residential construction remains the engine of growth, expanding at around 8 per cent year-on-year.
2. Non-residential construction is also growing steadily, suggesting commercial confidence has not collapsed.
3. Engineering construction has softened, potentially reflecting project cycles rather than structural weakness.

For builders, the data reinforces that demand remains present, but growth is uneven across sectors and geographies.

For governments, the numbers underline the importance of maintaining feasibility settings if housing supply is to expand meaningfully.

And for suppliers, the continued strength in building work signals that residential and commercial builders will remain active purchasers of materials and services into 2026.

The construction sector may not be surging. But it is not stalling either.

At $80 billion for the quarter and rising in trend terms, it remains one of the largest and most significant contributors to Australia’s economic activity. The question now is whether the steady climb in residential building can be sustained and accelerated to meet the structural housing challenges ahead.

Author: TGB Editorial