RBA Warns of Residential Construction Slowdown from Late 2027

The Reserve Bank of Australia (RBA) has forecast that dwelling investment will decline from late 2027, according to its August Statement on Monetary Policy. The central forecast shows dwelling investment growth slowing every six months from now, turning negative in the second half of 2027 and staying negative through the first half of 2028.

Despite a strong approvals year in 2025-26, with 205,249 dwellings approved, the RBA's forecast suggests that the existing pipeline is currently masking the effect of falling housing prices on new building activity. The Bank attributes this to the impact of tightening monetary policy and tax policy changes.

The RBA's liaison notes, which summarize discussions with around 240 businesses and industry bodies, reveal that many housing builders are working through existing pipelines but expect construction activity to slow over the year ahead due to softer sales volumes and an uncertain outlook for housing prices.