Australian Economic Comment: Q1-26 dwelling commencements -11.2% q/q, to 192k ann. Data centre construction booming.

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Australian Economic Comment: Q1-26 dwelling commencements -11.2% q/q, to 192k ann. Data centre construction booming.

Global Research

8 July 2026ab

Australian Economic Comment Economics

AustraliaQ1-26 dwelling commencements -11.2% q/q, to

192k ann. Data centre construction booming. George Tharenou

Economist

george.tharenou@ubs.com

+61-2-9324 3520

Stephen Wu

Dwelling commencements in Q1-26 fell by -11.2% q/q to 192k annualised, Economist

with still a large pipeline of residential work to be done. UBS continue to stephen.wu@ubs.com

forecast dwelling commencements in 2026 of ~200k. +61-2-9324 2283

Construction overall supported by data centres booming to estimated ~3% Izzy Lowe

of quarterly GDP. Associate Economist

izzy.lowe@ubs.com

+61-2-9324 2651

Q1-26 dwelling commencements fall -11.2% q/q, to 192k annualised pace

Tatiana Bodrova

Dwelling commencements in Q1-26 fell -11.2% q/q (after +9.5% q/q). The y/y softened

Associate Economist

significantly to 0.2% (after 26.6%). Non-detached (medium- & high-density) tatiana.bodrova@ubs.com

commencements unwound Q4 gains, to be 5.6% y/y, following 4 quarters of 20%+ y/y +61-29-324 2645

growth. Private house commencements also weakened, falling -3.5% q/q & -2.1% y/y.

Overall, commencements are annualising at a ~192k pace (& 197k over last 12m).

Approvals remain decent; indicating commencements to modestly improve

Timelier indicators provide a relatively positive signal for commencements, albeit still a

large cumulative underbuilding. Monthly residential building approvals for several

months has averaged a still solid ~205k. However, RBA interest rate hikes are a

downside risk, with UBS expecting a further +25bp hike in Aug-26. And Budget tax

changes are creating some uncertainty. UBS still see dwelling commencements of ~200k