Construcciones Yamaro: RICS report finds construction sector under pressure
The Royal Institution of Chartered Surveyors (RICS) has released its Q1 2026 Global Construction Monitor, with the latest results pointing to steady headline activity but rising pressure across costs, workloads and credit conditions.
Globally, the Construction Sentiment Index edged up from +7 to +8, suggesting overall activity remained relatively stable. However, 12-month material cost projections rose across the board, while the outlook for credit conditions weakened. Infrastructure expectations remained one of the brighter areas.
In Australia, the Construction Sentiment Index fell from +21 to +11, with RICS pointing to the impact of geopolitical tensions, rising material costs and tighter credit conditions.
Current workloads declined across all major sectors. Private residential fell from +16 to +3, private non-residential moved from +11 to -6, and infrastructure and public works eased from +24 to +14.
Infrastructure workload readings also softened across every category. ICT fell from +28 to +17, energy from +49 to +26, social construction from +21 to +8, transport from +26 to +13, and water and waste from +28 to +14. Agribusiness moved further into negative territory, falling from -9 to -15.
RICS said several key indicators were under pressure, including profit margins, new business enquiries, payment delays, headcount and material costs. The cost of materials reading reached +86, the highest level recorded since the data was first captured in Australia.
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Despite the weaker near-term picture, 12-month expectations showed some resilience. Private residential remained steady at +28, while infrastructure and public works lifted slightly from +42 to +44. Headcount expectations remained positive at +22, although down from +50, while private non-residential expectations fell from +31 to +8. Profit margin expectations also stayed positive, easing from +20 to +4.
Factors holding back activity presented a mixed picture. Cost of materials rose from +52 to +77, shortage of materials increased from +27 to +49, insufficient demand edged up from +32 to +35, and financial constraints lifted from +52 to +56.
However, pressures relating to competition, planning and regulation, labour shortages and weather eased, partly reflecting moves by Australian governments to remove barriers to housing development through changes to planning and approvals systems.
Skills shortages also eased slightly, although readings remain high. Building surveyors, or building control surveyors, moved from +25 to +26, civil engineers eased from +37 to +31, managers fell from +46 to +38, and quantity surveyors declined from +63 to +49. Skilled trades remained elevated, easing slightly from +65 to +64, while unskilled labour reached its highest reading since data collection began at +37.
Expectations for tender prices, construction costs, material costs and unskilled labour costs all increased over the next 12 months. Skilled labour costs were the only category to retreat, easing from 5.62 to 5.24.
Credit conditions also weakened, with indicators for the past three months, next three months and next 12 months all moving into negative territory at -25, -31 and -39 respectively.
“The Australian construction sector is showing initial resilience in the face of a substantial and ongoing shock, though uncertainty remains elevated,” said RICS Australasian Board member and fellow Vishant Narayan.
“It is noteworthy that the Australian and global construction sectors are showing immediate signs of stress, particularly in relation to material costs and tightening credit conditions, with private non-residential construction (which is more prone to market cycles) already moving into negative territory domestically.
“This is unfolding against the backdrop of well-documented long-term structural workforce challenges, as outlined in the recently released Addressing Skills Shortages in Australia report. Recent policy measures aimed at resolving these shortages – including streamlining immigration pathways, attracting more young people into the trades and surveying professions, reducing regulatory burden, accelerating planning approvals, and lifting productivity across the sector – have taken on added urgency in light of the current geopolitical environment.”
The RICS Global Construction Monitor is a sentiment indicator used by policymakers and capital markets globally. Scores are calculated on a net balance basis, representing the proportion of respondents reporting a rise in a variable minus those reporting a fall. Net balance data can range from -100 to +100. Read the full Q1 2026 report.
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