Consult Australia’s 2026 survey of design and engineering firms puts residential among the sectors with too much work. Spare capacity is tightening, and 92 per cent of firms are absorbing cost increases rather than passing them on.

Consult Australia’s 2026 Market Conditions Report has landed, and it points in a different direction to last year. Work is coming back. Residential is one of the sectors driving it. And the firms doing that work are absorbing more cost than they are recovering.

The survey covers member businesses across design, advisory and engineering. These are the practices that produce the structural engineering, the surveying, the town planning advice, the energy assessments and the certification that sit in front of almost every residential job. When their conditions shift, it changes what a builder can get, how quickly, and at what price.

Three findings matter most for anyone relying on that work. These firms are busier than they were. Their spare capacity is shrinking. And they are competing harder on price while their own costs climb.

The market turned, and it turned quickly

The clearest signal is workload. The number of sectors where surveyed businesses reported having too much work doubled, from six in 2025 to twelve in 2026. The report names residential, resources and industrial buildings, including data centres, as leading that shift.

Residential in this survey sits under buildings and precincts, spanning apartments, townhouses and master planned residential. Resources and industrial buildings are the other two sectors driving the shift, with data centres called out specifically in member responses.

The recovery is not evenly spread, and the split is worth knowing. More than half of surveyed businesses still report insufficient work in recreational and cultural spaces, schools and childcare facilities, transport buildings, and rail. Half report the same in defence and road transport. The strongest improvements came in airports, commercial buildings and justice, each shifting by more than 20 per cent.

For anyone weighing where the work is going to be, that is a clearer signal than the headline recovery. Parts of the market are expanding while others contract, and the consulting layer feels it first.

Spare capacity moved with it. In 2026, 91 per cent of businesses expected to have capacity either now or within six months, down from 97 per cent in 2025. Consult Australia reads that fall as evidence of more work in the system, and the workload results support it.

The workforce numbers tell the same story. Staff numbers are increasing at 41 per cent of surveyed businesses, though 25 per cent have reduced headcount. More than a third now expect to grow their workforce over the coming year, up from 14 per cent. Expected pressure on workforce capacity eased to 41 per cent from 53 per cent.

People are also staying put. Voluntary turnover below 10 per cent was reported by 68 per cent of surveyed businesses, up from 38 per cent. The report reads that as a tightening labour market making staff less willing to move, rather than as a sign of contentment.

One caveat worth stating plainly. The survey drew responses from 42 member businesses, which together employ more than 27,830 people. It is a small sample weighted toward large operators, and the report itself notes that sole traders and small practices are experiencing conditions differently.

Residential is busy and doubted at the same time

Here is the tension a builder should sit with.

Residential is named among the sectors leading the shift to too much work. It is also named among the sectors consultants are least confident about. In the outlook section, the report records that the residential market sparked less confidence in member comments, linked explicitly to tax changes and interest rate rises. The 2026 Federal Budget was released while the survey was open.

Defence, energy, water, rail and data centres are what is driving optimism. Residential and transport are described as more circumspect.

So consultants are staffing to residential demand they do not fully trust. That produces cautious hiring. Cautious hiring is exactly what makes documentation queues form when volume lifts, because the bench never gets deep enough to absorb a surge.

Builders already know that approvals do not automatically become commencements. The consulting layer is one of the places that conversion either happens or stalls, and it is now carrying a workload it is not confident will hold.

Costs are rising faster than fees

The squeeze on consultancies is sharper this year than last.

Salaries and wages were ranked in the top three fastest rising costs by 78 per cent of businesses, up from 48 per cent in 2025. Information technology costs were named by 57 per cent, and regulation and compliance by 32 per cent.

Fees have not kept up. Only 27 per cent of businesses increased their fees by more than CPI. Just under half increased by CPI, and 24 per cent did not increase fees at all.

The result is that 92 per cent of businesses did not pass their full cost increases on to clients. Only 8 per cent fully passed them on. Consult Australia describes the remainder as firms financing the gap between what expertise costs and what clients will pay.

Compliance alone accounts for around 11 per cent of business budgets on average, with responses ranging from 5 to 30 per cent.

Increased price competition remains the most widely anticipated change for the year ahead, named by 62 per cent of businesses.

Why the cheapest fee proposal is now a risk signal

This is the part with the most practical value for builders, and the report says it plainly.

Among the external factors weighing on the year ahead, the report identifies increased competition for immediate work as firms seek to use available capacity, and states that this amplifies the risk of under pricing as work becomes harder to win and more urgent for business continuity.

Read that from a builder’s side of the table. A consultancy that wins an engagement on a thin fee has fewer hours to spend on it. That shows up as slower turnaround, less experienced staff on the drawing, more revision cycles, and a certification date that keeps moving.

The lowest quote has always carried delivery risk in construction. What this report adds is evidence that the people producing the documentation are now under the same pressure builders recognise in their own tender processes.

Two further findings sharpen the point. More than half of surveyed businesses, 57 per cent, believe they are operating in a higher risk environment than twelve months ago, up from 43 per cent. The steepest increase was reported by sole traders and small practices, which are often the specialist consultants engaged directly on smaller packages.

And the challenge posed by client requirements and timeframes jumped from 30 per cent in 2025 to 57 per cent in 2026. Consultants are feeling squeezed on deadlines at the same time as they are competing on price.

The Queensland picture

For south east Queensland builders there is a specific mechanism in the member comments.

Members described major Queensland projects absorbing available funding and increasing competition for the rest of the work. Pipeline stop start was named as particularly challenging in Queensland and Victoria. Among the external factors most affecting businesses, members raised the volume and certainty of the public infrastructure pipeline, including the timing of confirmed commitments such as the Brisbane Olympics.

The practical read is that consulting capacity gets drawn toward large public projects, and residential work competes for what remains. That is a very different problem to a general shortage, and it behaves differently. It concentrates rather than spreads.

Pipeline uncertainty is still the headline, with one caveat

Pipeline uncertainty was cited by 78 per cent of businesses as a factor affecting capacity, and identified as the biggest challenge of the past year by 70 per cent. Procurement delays were named by 58 per cent, an improvement year on year.

As the biggest challenge, pipeline uncertainty has been climbing. It sat at 57 per cent in the 2024 survey and 68 per cent in 2025.

One caveat belongs with that number. The 2026 survey removed escalating costs of doing business as an answer option and replaced it with regulatory and compliance burden, and cashflow. Escalating costs was the top ranked challenge in 2025 at 70 per cent. So pipeline uncertainty taking first place this year is partly a consequence of the option change rather than purely a change in conditions. The underlying rise across three surveys still stands.

The forward view is genuinely split. Some 41 per cent of businesses expect an increase in the pipeline of work and 35 per cent expect a decrease, both up on last year. That is not a market with a single direction. It is a market where parts expand while others contract.

Where the materials argument fits

Cement Concrete and Aggregates Australia responded to the report by making the supply side case.

The position put by CCAA chief executive Michael Kilgariff is that heavy construction materials cannot be switched on overnight. Developing new quarries, concrete plants and cement manufacturing capacity takes years of planning, investment and regulatory approval, and when projects are delayed or reprioritised the industry cannot justify investing in production capacity, freight networks or workforce capability. CCAA values the heavy construction materials industry at $20.7 billion of GDP and 112,970 jobs, and is asking governments to build long term materials planning into infrastructure planning rather than treating it as a downstream assumption.

It is an advocacy position, and it is worth reading as one. But the underlying logic holds for people as well as for quarries. A firm that trimmed its bench through a quiet stretch does not rebuild it in a quarter, and the 2026 findings show firms only now moving back toward hiring.

What actually changes for builders

None of this argues for delay. It argues for treating consultant selection as a delivery decision rather than a line item.

The window where consultants were plentiful and hungry has narrowed. Residential is among the busiest sectors in the survey, spare capacity has tightened, and firms are hiring again rather than cutting. Documentation should be booked earlier than it was two years ago, not later.

When fee proposals come back, the spread matters more than the lowest number. A quote well below the others is now more likely to reflect a firm chasing utilisation than a firm with genuine efficiency, and the report names that risk directly.

Consultant fees also land at the front end of a job, well before the first progress claim, which makes the timing of that spend a cash flow decision as much as a scheduling one.

And it is worth remembering that consultants do not run separate businesses for houses and for highways. They run one business. Infrastructure demand sets the price and the availability of both, which is why a survey about the infrastructure pipeline ends up describing conditions on residential sites.

THE GOOD BUILDER TAKE

The easy read on this report is that more work is good news. The more useful read is that residential is now busy for consultants who do not believe it will last, which is the combination that produces cautious hiring and thin documentation capacity when volume lifts.

The single most actionable line in the report is the one about under pricing. When 92 per cent of firms are absorbing cost increases and 62 per cent expect price competition to intensify, the cheapest fee proposal on the table is carrying information. It is worth asking what has been left out of it before signing.

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This article is general information only. It does not take into account your particular circumstances and should not be relied on in place of professional guidance specific to your business.

Author: TGB Editorial