For many of Australia’s multicultural communities, the path to home ownership has felt increasingly out of reach. However, new industry forecasts suggest that 2026 could mark a turning point for the building sector, potentially easing the chronic supply shortage that has gripped the nation.
Data released by the Housing Industry Association (HIA) indicates that the foundations for a housing upswing are finally being laid. After years of subdued activity, building approvals – the primary signal for future construction – are on the rise, particularly in states popular with new arrivals like Western Australia and Queensland.
Building for a growing population
The HIA report highlights that “strong population growth” remains a key driver of housing demand. For migrants and international students who have arrived in recent years, this has often translated into a fiercely competitive rental market and high property prices.
“Building approvals are the clearest leading indicator of future home building, and they have been gradually rising over the past year as the cash rate fell,” said HIA Senior Economist Tom Devitt.
The data shows a significant shift in the type of homes being approved:
- Standalone houses: Approvals up 10.1 per cent compared to two years ago.
- Apartments and units: A surge of 36.4 per cent in approvals, a sector crucial for first-home buyers and those seeking affordable entry points into the market.
“We expect approvals to continue trending upward, which should translate into higher levels of home building activity through 2026, particularly once the impact of earlier rate cuts flows through to construction starts,” Mr Devitt said.
The interest rate “wildcard”
While the 2025 interest rate cuts provided a much-needed “tailwind” for housing demand, the pace of the 2026 recovery is not yet guaranteed. Inflation remains a concern for the Reserve Bank of Australia (RBA), with recent surprises in electricity and rental prices keeping the annual rate at 3.2 per cent.
For many migrant families, borrowing capacity is the biggest hurdle. Mr Devitt warned that without further easing in borrowing costs, the recovery in home building will be “more gradual than Australia needs, given the scale of the housing shortfall.”
Opportunities by state
The recovery is not uniform across the country, which may influence where new migrants choose to settle.
- Western Australia leads the pack with a staggering 71.3 per cent increase in approvals.
- Queensland (+33.6%) and South Australia (+29.2%) also show robust growth.
- New South Wales and Victoria, while slower to start, are beginning to turn a corner as interest rate impacts flow through.
Why this matters for multicultural communities
Australia currently faces a shortfall of nearly two million homes. This shortage disproportionately affects multicultural and low-income backgrounds, often leading to overcrowding or high rental stress.
The HIA argues that for the 2026 upswing to truly benefit the community, more must be done to lower the “government charges” and “taxes on housing” that currently add to the cost of a new home.
“The next housing upswing is taking shape, but it will not reach its full potential unless policy settings support it,” Mr Devitt concluded.
What will happen to house prices in 2026?
This video provides an expert breakdown of the factors influencing Australian property prices in 2026, including supply shortages and the impact of interest rate changes on affordability.
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