Mackay Chapman February building and construction update
Welcome to Mackay Chapman’s February building and construction update.
This month, the data tells a confronting story for Victoria. New figures show housing completions have fallen to their lowest September quarter result in more than a decade. At the same time, national insolvency data confirms the construction sector remains under extreme pressure, with Victoria again at the centre of the fallout.
Against this backdrop, access to DBI eligibility, capital stability and regulatory certainty remain critical for Victorian builders seeking to survive (and grow) in 2026.
Victorian housing completions fall to 11-year low
Victoria recorded just 13,748 home completions in the September 2025 quarter, the lowest September quarter result since 2014.
That kind of significance isn’t just cyclical.
Since 2014, Victoria’s population has grown by approximately 1.2 million people. In other words, the state is still delivering homes at 2014 numbers; for a population more than 20 per cent larger.
Building starts also declined over the quarter, falling from 14,105 in June to 13,415 in September.
While other states, including New South Wales and Queensland, recorded increases in activity, Victoria’s pipeline continues to soften. Industry representatives have attributed this to increased property taxation, investor settings and development costs that are dampening new project feasibility.
Nationally, dwelling commencements rose modestly to 48,778 for the quarter. However, these levels remain well below what is required to meet federal housing targets.
For Victorian builders, the concern is twofold: a shrinking forward pipeline in the short term and mounting pressure to accelerate delivery in the medium term.
Without improved policy settings and capital certainty, the mismatch between population growth and housing supply will continue to widen.
Construction insolvencies and mental strain intensify
New ASIC data confirms the construction sector remains at record insolvency levels nationally.
In the 2025 financial year, 3,596 construction businesses collapsed, the highest annual figure on record. Victoria accounted for 1,051 of those insolvencies, second to New South Wales.
Beyond the numbers, industry groups are reporting increasing mental health strain across the sector. Blue-collar support service TIACS confirmed that a significant proportion of callers are from the construction industry, with rising reports of depression, financial distress and burnout.
Smaller Victorian builders (particularly those employing fewer than 10 staff) appear disproportionately affected.
Fixed-price contracts entered during cost escalation periods, combined with rising compliance burdens and insurance constraints, continue to erode margins.
The federal target of 1.2 million homes over five years places additional pressure on a workforce already stretched to its limit.
For Victorian operators, this environment reinforces the importance of disciplined risk management, careful contract selection and proactive engagement with DBI and regulatory requirements.
Strategic DBI advisory for Victorian builders
Mackay Chapman’s DBI-focused building and construction practice remains a core part of our Victorian advisory work.
Recent matters include:
- Assisting a Victorian builder with fewer than 20 employees secure a significant DBI limit increase after prior rejection by the Building Practitioners Board
- Successfully negotiating removal of restrictive conditions imposed on a builder’s DBI eligibility
- Advising on the acquisition of a Victorian building business and structuring the transfer of DBI eligibility to the incoming owner
- Securing removal of conditions affecting domestic building registration
- Acting for a Victorian developer pursuing non-payment under a DBI policy issued by AssetInsure
- Pursuing recovery actions on behalf of liquidators of a Victorian subcontractor against major construction companies
DBI can determine whether a builder grows, stabilises or stalls. Early strategy, financial positioning and structured negotiation are often decisive.
If your business is considering a DBI increase, has had an application refused, or is navigating eligibility conditions, we encourage you to seek advice with us sooner rather than later.
Risk, resilience and readiness in 2026
Victoria’s construction sector is entering 2026 with a constrained pipeline, ongoing insolvency pressure and unresolved supply-demand imbalance.
Regulatory, insurance and financial frameworks must be navigated carefully.
As always, our focus is to help Victorian building businesses manage risk, preserve eligibility and position themselves for sustainable growth.
The contents of this update and its linked articles do not constitute legal advice, are not intended to be a substitute for legal advice, and should not be relied upon as such. They are designed and intended as general information in summary form, current at publication, for general informational purposes only. You should seek legal or other professional advice concerning any particular legal matters you or your organisation may have.
