Small home builders across Australia remain cautious about their business prospects even as the market for new home building continues to improve, new research from the Housing Industry Association (HIA) reveals.

Set to be released once the full report is compiled, the research is based on a national survey which HIA undertook of its members.

The survey examined member experiences and sentiment in terms of the forward outlook as well as critical business challenges.

In a key survey finding, small builders remain cautious about their profit expectations notwithstanding that home building conditions are improving.

Of more than 300 small business members that responded to the question, almost six in ten (59 percent) expected their overall profits to either deteriorate or remain the same in the current financial year when compared with 2024/25.

This leaves only 41 percent who either expect a profit rise or are uncertain of profit expectations.

The result comes despite a continued improvement in the market for new home building, which can be seen through an upward trend in dwelling approvals that has been evident since March 2024.

Simon Croft, HIA Chief Executive – Industry and Policy, says that HIA members continue to experience challenges associated with high insurance costs, labour shortages and planning delays.

Croft says that margins will remain tight as builders continue to absorb higher costs for labor, materials and regulatory requirements at the same time as needing to deal with slow approval timeframes and financing costs.

He encourages governments to accelerate planning approvals, remove unnecessary red tape and support workforce growth.

“If businesses aren’t making reasonable returns, they lack the capital to take on new projects and reinvest in operations or staff to improve productivity – creating a cycle that’s hard to break,” Croft said.

“Lifting confidence – and the viability of small businesses – in the building sector must be a priority if governments are serious about tackling Australia’s housing shortfall and meeting the target of 1.2 million homes.

“If confidence remains weak, fewer homes will be built. Improving conditions for builders is one of the fastest ways governments can help unlock new housing in 2026 and beyond.”

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