Fresh figures from the Australian Bureau of Statistics have confirmed what most Aussie tradies already know — the cost pressures just keep piling on.
Inflation jumped to 3.8 per cent in December 2025, with housing costs and labour shortages doing most of the heavy lifting. According to Master Builders Australia (MBA), services inflation hit an eight-month high, driven by the ongoing struggle to find enough skilled workers across the economy.
MBA Chief Economist Shane Garrett said those labour shortages are hitting productivity and pushing up the cost of getting the right people on site.
“This inflationary surge shows that price pressures were much tougher at the end of 2025 than anticipated by the Reserve Bank. There is now a real threat that interest rates could start increasing as early as next week,” he said.
“With housing costs up by 5.5 per cent compared to a year ago, new home costs growing at their fastest pace in 14 months and rents climbing another 3.9 per cent, housing affordability is under greater strain, even before a possible interest rate rise.”
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MBA CEO Denita Wawn says this situation will surprise absolutely no one in the building and construction game.
“For years, we have struggled to build the new homes Australia needs against a backdrop of worsening labour shortages, longer delays in build times and escalating construction material costs.”
Ms Wawn says urgent action is needed from the Federal Government to ease pressure on the supply chain and help more Australians into homes. “The industry needs the Federal Government to urgently action needed reforms, which would lead to a reset in the supply and demand balance, while allowing more Australians to get onto the property ladder.”
She adds that red tape, productivity and workforce shortages must be tackled head-on. “Proposals that will put additional pressures on the supply chain need to be demolished, worksite productivity and workforce numbers must be lifted to new heights, and the Government must have policy geared so that builders can focus on building instead of navigating increasingly complex regulatory systems.” With calls to cut red tape by 25 per cent, fast-track apprenticeships and align migration with real workforce demand, the message from Master Builders is clear: construction needs to be treated as a national priority — and it needs to happen fast.