A new global report puts hard cost figures on the trades competition we flagged earlier this year. Brisbane’s construction cost inflation is forecast to top the region at 7.2 per cent in 2026.
When we wrote about the data centre boom draining the trades that build homes, the argument was structural. Hyperscale projects were locking up electricians and mechanical trades, and residential builders were competing for workers the market had already priced out of their reach. That was the labour story. What it did not have was a number.
Now it does. A report released on 10 July by global construction consultancy Turner & Townsend puts hard figures on what that competition is doing to build costs, and the numbers are not comfortable reading, particularly if you build in Brisbane.
The headline for Queensland builders: construction cost inflation in Brisbane is forecast to hit 7.2 per cent in 2026, the highest of any city in Australia or New Zealand. That is not a labour-shortage warning for some point in the future. It is a cost forecast for the year you are quoting jobs in right now.
What the numbers actually say
The report is Turner & Townsend’s Global Construction Market Intelligence, now in its seventeenth year, drawing on data from 112 markets across 44 countries. That scale matters, because it lets you see how Australia stacks up against the rest of the world rather than just against itself. And on the measure that hurts most, Australia leads in the wrong direction.
Australia and New Zealand are the most labour-constrained construction markets on the planet. Every single city surveyed in the region reported labour shortages. One hundred per cent. For comparison, the European Union sat at 93 per cent and North America at 79 per cent, and those are considered tight markets. Australia is tighter than both.
On cost inflation, the regional forecast is 5.4 per cent for 2026, easing slightly to 4.9 per cent in 2027. But the regional average hides a wide spread between cities, and that spread is the part worth reading closely.
Forecast construction cost inflation by city (Turner & Townsend, 2026)
| City | 2025 (%) | 2026 (%) | 2027 (%) |
|---|---|---|---|
| Brisbane | 6.2 | 7.2 | 7.5 |
| Perth | 3.9 | 6.5 | 5.5 |
| Sydney | 3.7 | 5.5 | — |
| Adelaide | 3.4 | 5.5 | — |
| Melbourne | 3.6 | 5.0 | — |
| Auckland (NZ) | 2.0 | 2.5 | — |
Source: Turner & Townsend Global Construction Market Intelligence 2026. 2027 figures published for Brisbane, Perth and Auckland only.
Put plainly, if you are building in Brisbane or Perth in 2026, your input costs are climbing at a meaningfully faster rate than a builder doing the same work in Melbourne. Geography is now a cost factor in its own right.
Why Brisbane is wearing it worst
The Brisbane number is not really about data centres alone. It is about three demand surges landing on the same workforce at the same time.
The first is the 2032 Olympic and Paralympic Games. The build-up to Brisbane 2032 is pulling forward a wave of infrastructure and venue work, and that pull is already showing in the cost forecasts years ahead of the event. The second is a heavy pipeline of health infrastructure investment across Queensland. The third is the data centre wave, which the report identifies as one of the strongest-performing construction sectors nationally and a top performer in Sydney and Melbourne specifically.
Stack those three on top of a workforce that was already the most constrained in the developed world, and you get the highest cost inflation in the region. The consultancy’s own economist framed it as competition on multiple fronts at once: Olympic projects up against Queensland health work, a national data centre wave, and rising defence investment linked to AUKUS, all chasing the same pool of skilled labour.
For a residential builder in South-East Queensland, none of those projects are yours. But all of them are bidding for the trades and the materials you need, and that competition is what shows up in your quotes.
The two-speed market is now official
One of the clearer messages in the report is that Australian construction has split into two speeds, and which speed you are on depends on what you build.
Data centres, defence and health are running hot. Office development and residential are running cold. This is not a subtle divergence. Data centres are described as the most capacity-constrained sector in the region, with around two-thirds of markets reporting that contractor capacity is tightening. Meanwhile the traditional private-sector work that most home builders rely on faces what the report calls weaker market conditions.
That split has a direct consequence for anyone in residential. The hot sectors set the price of labour, and the cold sectors have to pay it anyway. When a data centre or a hospital project offers premium rates to secure a mechanical or electrical crew, that becomes the going rate in the market. A residential builder does not get a discount for being in the slower lane. They compete at the price the fast lane has set, on margins the slower lane can barely support.
The specialist trades feel this most acutely. Mechanical, electrical and plumbing trades, the ones essential to data centres and complex infrastructure, showed shortages in 83 per cent of markets across the region. Those are the same trades a residential build depends on, and they are being bid away by projects with deeper pockets.
What this means for how you quote and plan
None of this is a reason to down tools. But it does change how a careful builder should be pricing and planning through 2026.
The first implication is about fixed-price exposure. If input costs in your city are climbing at 6 or 7 per cent, a long fixed-price contract signed today carries more risk than the same contract would have carried in a lower-inflation market. The gap between what you quoted and what the job costs by the time you build it is wider in Brisbane and Perth than almost anywhere else in the country. That does not mean avoiding fixed price. It means building realistic escalation assumptions into the number, and being honest with clients about why.
The second is about trade availability, not just trade cost. The report is clear that labour, not materials, is now the primary driver of cost escalation. Materials have largely stabilised. Labour has not. That means the risk to your program is increasingly about whether you can get the crew when you need them, not just what they charge. Locking in your key trades earlier, and treating your relationships with reliable subbies as a genuine business asset, matters more in a 100-per-cent-shortage market than it does in a balanced one.
The third is about where you choose to work, if you have that choice. A builder operating across state lines, or weighing an expansion, now has a real cost-inflation reason to factor geography into the decision. The same build carries a different cost trajectory in Melbourne than in Brisbane, and that difference is now quantified.
The longer view
It is worth keeping perspective on all of this. The report also notes that construction input costs have broadly stabilised over the past year, with supply chains proving far more resilient than they were during the pandemic. The cost pressure now is not the broad, everything-everywhere inflation of 2022. It is narrower, more local, and more concentrated in specific trades and specific cities. That is a more manageable problem than the one the industry faced three years ago, even if it does not feel that way when you are the one absorbing a 7 per cent increase.
There is also a genuine opportunity buried in the pressure. The same report notes that AI capability is becoming more important in how projects are won and delivered, and that the data centre wave, for all the strain it creates, is generating demand that will not fade quickly. Builders and trades who develop expertise in the technology-heavy sectors, or who simply run tight, well-systemised operations that can absorb cost volatility, will find no shortage of work. The firms that struggle will be the ones treating a structurally tighter market as a temporary inconvenience rather than the new baseline.
The data centre boom was always going to cost residential builders something. Now the size of that cost is on the table, and in Brisbane it is the highest in the country. The builders who plan for it will be the ones still standing when the noise settles.
The Good Builder Take
The number that matters here is not 7.2 per cent, it is the gap between your city and the next one. If you build in Brisbane or Perth, price escalation into your fixed-price jobs and lock your key trades in early, because labour, not materials, is what will move your costs this year. This is not a crisis to react to. It is a baseline to plan around.
Frequently asked questions
Brisbane. Turner & Townsend’s Global Construction Market Intelligence 2026 forecasts Brisbane construction cost inflation at 7.2 per cent for 2026, the highest of any city in Australia or New Zealand, rising to 7.5 per cent in 2027. Perth follows at 6.5 per cent, with Sydney and Adelaide at 5.5 per cent and Melbourne lowest of the mainland capitals at around 5 per cent.
Three demand surges are hitting the same workforce at once: build-up for the 2032 Olympic and Paralympic Games, a heavy Queensland health infrastructure pipeline, and the national data centre wave. Layered on top of the most labour-constrained construction market in the developed world, that competition for skilled trades is driving Brisbane’s cost inflation to the top of the region.
Data centres are the most capacity-constrained construction sector in Australia and New Zealand, competing hardest for mechanical, electrical and plumbing trades, which showed shortages in 83 per cent of regional markets. Those are the same specialist trades residential builds rely on. When data centre and infrastructure projects pay premium rates to secure crews, that becomes the market rate, and residential builders pay it without the deeper margins those projects carry.
Labour. Turner & Townsend’s report is clear that material prices have largely stabilised and supply chains have proven more resilient than during the pandemic. Labour availability is now the primary driver of cost escalation across Australia and New Zealand, where 100 per cent of surveyed markets reported labour shortages.
It describes a divergence where technology-led and public sectors run hot while traditional private work runs cold. Data centres, defence and health are performing strongly and competing hard for labour, while office development and residential construction face weaker conditions. The consequence for residential builders is that the hot sectors set the price of labour and the cold sectors have to pay it anyway.
Want the numbers that actually affect your margins, explained without the spin? The Good Builder Podcast breaks down what is happening in Australian construction and what it means on site. Listen on Spotify and Apple Podcasts.
Last updated: 13 July 2026. Cost figures are from Turner & Townsend’s Global Construction Market Intelligence 2026, released 10 July 2026, and are forecasts subject to revision.
General information only. This article is not financial, legal or professional advice and does not take account of your specific circumstances. Consider your own situation and seek professional guidance before acting on anything covered here.
Author: TGB Editorial
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