The latest Procore/Property Council Industry Sentiment Survey shows NSW confidence falling to 109 index points, down from 128 last quarter, but still above the national result of 104.
Property Council NSW Executive Director Anita Hugo said the March quarter results reflect one of the first industry-wide snapshots capturing the impact of the Middle East conflict, fuel shortages and escalating input costs.
"This survey was conducted between 9 and 27 March, right as global energy markets tightened and fuel price volatility surged. The result is a sharp reset in confidence driven by costs and feasibility, not by a lack of demand for housing, commercial space or investment," Ms Hugo said.
"NSW confidence has clearly taken a hit, but it remains in positive territory and above the national index. That tells us there is still appetite to invest and build in our state – however the industry is being squeezed hard by higher construction, financing and operating costs."
The March 2026 survey for NSW shows a broad-based softening in expectations:
- Staffing intentions remain positive, but remain below the long-run average, signalling greater caution from businesses.
- Forward work schedules declined over the quarter, reflecting delayed decisions and feasibility reassessments rather than project cancellations.
- Expectations for both national and NSW economic growth are decisively negative, with NSW respondents among the most pessimistic nationally.
- Interest rate expectations have swung sharply, with NSW firms now overwhelmingly expecting rates to rise further, compounding feasibility pressures.
- Debt finance availability is expected to worsen, adding another constraint to project delivery.
Capital growth expectations across NSW remain mostly positive, though weaker than last quarter. Residential, industrial, retirement living and hotels all remain in growth territory, while office and retail expectations are subdued, reflecting higher financing costs and softer tenant demand in some segments.
Ms Hugo said the industry's ongoing engagement with the NSW Government had been constructive, with Building Commission NSW's initial housing industry roundtable this week reflecting a welcome step to better understand the cost and feasibility pressures facing the industry.
"Regular, practical dialogue with government – and a willingness to keep policy settings under review as market conditions evolve – will be critical to restoring confidence and keeping projects moving," she said.
Ms Hugo said the NSW results underline how exposed housing and construction delivery is to global shocks when local cost burdens are already high.
"Fuel is a critical input across construction, freight and materials. When global shocks translate directly into higher local costs, the viability of new projects is hit almost immediately," she said.
"NSW respondents are telling us demand is there, but the numbers are not stacking up."
"The findings reinforce the need for government to focus support for industry on the costs they can control.
"Faster approvals and infrastructure coordination matter more than ever, paired with action on taxes, charges and fees that are making projects unviable," she said.
"For confidence to translate into cranes on the skyline and homes on the ground, we need to actively reduce the cost stack, especially at a time when global factors are already pushing costs higher," Ms Hugo said.
