Aussie small builders have revealed their fears for 2026 in the face of a key Albanese government plan they believe hasn’t been properlly resourced.

Australia’s small builders fear they’re in for a “rough” 2026 amid concerns demands for more housing are raising the risk of the widespread insolvencies seen in 2021 and 2022.

Housing Industry Association research released yesterday shows 59 per cent of small business members of the association do not expect to make a bigger profit in 2026 than they did in 2025.

This comes despite expectations the nation’s builders will be in high demand as efforts to reach a government goal of 240,000 new homes being built in a year ramp up.

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Sydney-based boutique builder Darren Zhou said for smaller operators the expected increase in activity in the year ahead held major concerns.

Mr Zhou said builders often had to quote their job before planning approval was confirmed, meaning they were trying to anticipate what trades would be charging in six or even 12 months’ time.

When material and tradie costs rose vast amounts in the span of a few months in 2021 and 2022, he said the industry watched as many “reputable, good builders were wiped out”.

“And I think there’s still a risk there that builder’s will collapse with these delays,” Mr Zhou said.

“My concern is … as we pump out 1.2 million homes, where do we get the workforce?”

The target is a key policy of the Albanese government intended to help create enough new housing to improve affordability for Australian homebuyers.

Australia is looking to build 1.2 million new homes in a five year period ending in 2029.

With the target effectively mimicking the stimulus of the HomeBuilder scheme in 2020 and 2021, he said the nation’s current workforce would not be able to keep up.

Mr Zhou said without an increase in skilled international trades being brought in, and shown how to work to Australian standards, or significantly more being trained locally — the tradies that were working would be able to raise costs significantly.

“So if we do get the approvals, the subbies (subcontractor trades) will be able to dictate costs, but the builders will still have to honour costs they have quoted six months ago,” he said.

“A lot of builders are expecting this year to be quite rough.”

The result would be more builders becoming insolvent, he said.

Latest Australian Securities and Investments Commission data shows almost 1600 construction workers had entered administration in the almost six months from July 1 to December 22 last year.

There were almost 3600 that did so in the 2024-2025 financial year.

The HIA research found that about two thirds of builders in New South Wales and Victoria were not expecting to make more money in the coming year than they had in the prior 12 months.

The figure was north of 50 per cent Queensland, Tasmania and Western Australia.

The only state where small business builders were expecting to raise profit margins was South Australia.

Aussie builders fear a lack of tradies will cause significant cost increases in building homes, and raise the risk of insolvency when paired with red tape delays.

HIA industry and policy chief executive Simon Croft said there was a further risk that where businesses weren’t making reasonable returns, they wouldn’t be able to take on new projects or invest in new staff and productivity boosting capital.

“Many members report that high insurance costs, labour shortages and persistent planning delays are limiting new work and investment decisions,” Mr Croft said.

“Margins are expected to remain tight, with builders continuing to absorb higher labour, material and regulatory costs, while approval time frames and financing constraints slow projects before they even start.”

He said that the government’s building targets required efforts to lift builder confidence, and small business viability.

“Governments can make an immediate difference by accelerating planning approvals, cutting unnecessary red tape and supporting workforce growth across the construction sector,” Mr Croft said.

Mr Zhou said many builders were struggling with red tape.

While his firm, founded by his father in 2006, had initially run with just the builder oversighting paperwork and regulatory requirements, today this required a full-time office staff member.

The industries small builders are anticipating a “rough” year in 2026.

The builder said while many of the increased requirements centred on safety, some were causing costly delays.

He pointed to a recent job where he was asked to provide a fire test report for carpet being put into the home.

The result was a delay as they reached out to the provider of the carpet for their certification paperwork.

But with the cost of some trades rising almost weekly any delay could be costly.

“And that would hold up a lot of other smaller businesses,” Mr Zhou said.

“And if they used a carper that from overseas, they might not be able to get that … it would cost thousands to get tests done in a lab.

“And the reality is, that’s just for changing an old carpet to a new one.

“A lot of the older trades, my father’s generation, are retiring because of the red tape.”

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