Trends in dwelling construction & timber supply [AU]Friday 31 Jul 2026 Australia’s latest housing data is sending two seemingly conflicting messages. Dwelling approvals, a leading indicator of future construction activity, have remained volatile from month to month but continue to trend higher, particularly in the multi-unit sector. At the same time, dwelling commencements, which measure construction actually starting on-site, recorded their sharpest quarterly decline in several years.Sitting between these two indicators is structural timber demand. Softwood structural timber sales have continued to strengthen through 2026, suggesting the industry is responding to the underlying recovery signalled by approvals months earlier, rather than the short-term volatility evident in commencement data. The Latest ABS Release: Commencements Fall Sharply The ABS Building Activity, Australia release for the March 2026 quarter showed total dwelling commencements falling 11.2% to 48,012 dwellings in seasonally adjusted terms. The weakness was concentrated in the higher-density segment. Private sector other residential commencements, which include townhouses, units and apartments, fell 20.7% to 19,116 dwellings after rising 26.0% in the December 2025 quarter. Private sector house commencements also declined, although more modestly, falling 3.5% to 27,658 dwellings. 
Source: ABS, FWPA analysis The result represents a sharp reversal from the previous quarter. In the December 2025 quarter, total commencements had increased 8.0% to 53,567 dwellings, driven largely by a 23.4% increase in other residential commencements to 23,849 dwellings. The swing from a strong December 2025 quarter to a weak March 2026 quarter highlights the volatile nature of housing commencements, particularly in the multi-unit sector. Large apartment projects can significantly influence quarterly outcomes, making commencements far more erratic than detached housing activity. Building Approvals: The Leading Indicator of Future Supply While commencements weakened, approvals data tells a somewhat different story. Across the first five months of 2026, multi-unit approvals experienced substantial month-to-month swings. Private sector dwellings excluding houses fell 24.5% in January after declining 30.7% in December, rebounded in February, dropped 26.0% in March, rose 4.0% in April, and then declined a further 10.4% in May. House approvals have been considerably more resilient. Private sector house approvals increased 2.8% in May 2026 to 10,537 dwellings, the highest monthly result since September 2021. Importantly, May marked the fourth consecutive month with approvals above 10,000 dwellings. Although total approvals declined 1.1% for the month, they remained 5.3% above their level a year earlier. The divergence between approvals and commencements is a common feature of housing cycles. Approvals represent projects that have received planning consent, while commencements capture projects that have physically started construction. Between those two stages, developments may face financing constraints, feasibility challenges, labour shortages, or delays in securing construction contracts. As a result, approvals often provide an early indication of future activity, while commencements reflect decisions made several months earlier. The March 2026 quarter illustrates this dynamic clearly: approvals for detached houses remained near five-year highs, yet total commencements fell sharply over the same period. More - FWPA Forecasts and Structural Timber Demand Source & image credit: FWPA  |
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