The Albanese government has had good news and bad news, with a near record building boom underway — just not for houses. Picture: Mark Stewart / NewsWire.
Australia has just spent a whopping $83.4bn on construction in the span of three months, the second biggest outlay in the nation’s history.
But it’s not a housing boom, but a surge in data centres fuelling an AI and technology revolution around the country that experts have tipped to be behind the rising figures.
The value of residential building work getting done took a $160m hit as the nation’s biggest new housing economy, Victoria, plunged $370m, according to Australian Bureau of Statistics data released yesterday.
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In the three months to the end of March, the value of construction completed around the country rose 3.4 per cent to $83.4bn — with $27.06bn of that for residential building.
While the total construction work value was the highest since the September quarter of 2017, the second highest figure on record, the money spent on housing works was down from $27.22bn in the December quarter.
While already concerning for the Albanese government’s five-year goal to build 1.2 million new homes around the country, the national decline masks bigger reductions in spending on home building in key states.
In Victoria the value of works plunged from $4.46bn to $4.09bn, and after the $2.7bn non-house residential construction value in December became the highest level since 2020 — the March figure was a more modest $2.54bn.
Economists believe that data centres are helping drive a substantial chunk of the nation’s latest uptick in building and construction spend.
In NSW, the value of housing construction work dropped from $3.3bn in December to $3.24bn in March, while non-housing builds went from $3.67bn to $3.66bn.
South Australia’s numbers also dropped, with housing construction work falling below the $1bn mark for the first time since 2024 as it slid to $992.146m, while its unit sector had a close to $40m decline to $367.287m.
Queensland and Western Australia building activity saved the country from a national plunge in building works spending on homes.
While Queensland posted a modest fall from $2.89bn in housing works to $2.81bn, its non-house works surged from $2.03bn to $2.4bn — a $370m jump that covered most of the Victorian loss.
WA also posted a major growth uptick, with an $80m increase to a record $1.83bn for the state in March, up from $1.75bn in December.
The state’s new unit construction also increased, from $394.89m to $435.94m.
Victoria is the nation’s biggest contributors to new housing around the nation, but the money being spent on new homes there fell in the latest data.
The nation’s biggest home builder, Metricon, has indicated that their sales volumes for new homes subsequent to the timeline covered by the ABS data could indicate a slight rebound ahead — with a 15 per cent up tick in deposits paid from December to March.
However, chief executive Brad Duggan noted it was also possible those wanting to build a home were shifting towards larger volume builders to pursue affordability as well as greater certainty in the timing of when their home would be finished.
Mr Duggan noted they had not seen any significant decline in sales activity in the second half of 2025 that would have underpinned Victoria’s current decline in construction work being completed for homes, but suggested this could be evidence of activity becoming more constrained to the bigger builders.
However, he did note that the demand for new homes was showing signs that homebuyers were trying to purchase more affordable land and giving up some of the home features they once might have included to contend with rising cost-of-living concerns.
Housing Industry Association economist Maurice Tapang said they had already downgraded their expectations for Victoria ahead of the data being released, noting that there had been declines in new work starting in the state late last year.
Bigger spending on non-housing residential construction in Queensland, likely for units in Brisbane and the Gold Coast, helped soften the blow to housing.
“We were getting very low numbers from detached housing starts, and Victoria has been hard to read in the last couple of quarters,” Mr Tapang said.
“But when you look into everything that could be going wrong, there’s really only the state election coming up.”
Oxford Economics economist Michael Dyer said it was also possible that lower general activity in January as people take holidays could have contributed to a seasonal decline for some parts of the country.
However, he noted that the numbers would not yet be showing the impacts of the nation’s rising interest rates, the war in Iran or the federal budget’s tax changes — which could all take a year to begin to show in the data from the ABS.
“They definitely won’t be showing yet in the figures, we don’t expect to see these until late 2027 — it takes a while for those to flow through, though some will start sooner,” Mr Dyer said.
Home building numbers are yet to take a hit from more recent headwinds including multiple interest rate hikes as well as the war in Iran and its attendant fuel crisis.
The economist noted that the wider strong performance in new building around the nation was likely being led by construction of data centres.
Non-residential building work values increased 2.5 per cent in the latest figures to $17.65bn, with private works leading that charge.
“Data centres have raced ahead as the key driver of non-residential building activity, and there is still a sizeable and growing pool of work yet to come across the segment,” Mr Dyer said.
“More broadly, growth sub-sectors with high spends per square metre, including public hospitals, are maintaining their momentum.”
Another $38.65bn of the works done around the country was engineering, which includes civil works that lay the groundwork for future home builds.
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