The construction industry is predicted to continue to grow in 2026 despite its challenges.

Analysis by Planned Resources says demand is strong nationally, supported by public infrastructure, defence projects, renewable energy and housing demand.

Although it warns that labour shortages, cost pressures and uncertain economic conditions continue to have an impact on whether projects are completed or remain feasible.

It says New South Wales, particularly Sydney, has a large pipeline of public and private projects, although it faces some delivery challenges with construction costs forecast to rise by about 4%.

“Planning delays, approvals bottlenecks and infrastructure tie-ins remain recurrent themes, likely extending timelines for major mixed-use and high-density projects,” it says.

Victoria is also feeling the effect of labour shortages and contractor insolvencies, making delivery harder.

The report says that Queensland’s construction outlook is among the most dynamic, with a strong infrastructure pipeline and large projects, including worker accommodation villages supporting energy construction, which will expand regional activity.

Western Australia is tipped to be the construction leader in 2026, with housing approvals and commencements surging, making it the frontrunner for new home builders nationally. Perth’s construction costs are forecast to rise by about 5.3%.