Lack of Homes Chalked up to Red Tape, Lower Productivity Causing 80 Percent Longer Build Times

Two bricklayers work on a new home in Albany, Western Australia, on July 5, 2024. Susan Mortimer/The Epoch Times

As Australia’s housing crisis continues to dominate discussions ahead of the upcoming election, a new report from the Productivity Commission paints a grim picture for the sector.

In the last three decades, the construction sector has faced a dramatic downturn, with physical productivity dropping by 53 percent.

Labour productivity hasn’t fared much better, slipping by 12 percent.

Meanwhile, the cost of construction has skyrocketed by 40 percent over the past five years alone.

To make matters worse, the time it takes to build a home has ballooned by as much as 80 percent in the past 15 years—highlighting just how challenging it has become to meet the growing demand for housing.

The report gives some credit to the governments for focusing on alleviating constraints to new supply by altering planning regimes, but the speed and cost of new building remain significant barriers to increasing housing availability.

“The speed and cost of new building is  a constraint on new housing supply,” the report states.

Key Housing Challenges

The Commission’s findings spotlight four critical challenges faced by the housing sector: complex and slow approvals, a lack of innovation, insufficient scale, and workforce shortages.

The report also highlights that government policies, particularly slow and poorly coordinated regulatory processes, have compounded these issues.

Inconsistent regulations across jurisdictions and policies that have stifled innovation have made it harder for the industry to adapt and meet growing housing demands.

Denita Wawn, CEO of Master Builders Australia, stresses that productivity is more than just an economic term.

“Every day we drag our heels on tackling the challenges faced in the industry, the longer we drag out the housing crisis,” Wawn stated.

She advocates for a comprehensive, coordinated approach across all levels of government to address these issues.

Alongside these recommendations, Master Builders Australia has launched the Construct Your Career Guide, a resource aimed at attracting new workers to the construction industry to help fill the growing skills gap.

HIA Report Calls for 83,000 More Workers

Meanwhile, the Housing Industry Association (HIA) has highlighted the need for more than 83,000 additional workers across key residential construction trades. This is a 30 percent increase in employment levels, driven by the Australian government’s Housing Accord target of building 1.2 million new homes over five years.

The HIA’s All Hands on Deck report points to the need for skilled trades to meet this ambitious target.

“The HIA Trades Availability Index recorded -0.47 in the December Quarter 2024, representing only a modest improvement in the availability of skilled trades in the second half of last year,” stated HIA Senior Economist Tom Devitt.

Looking overseas, New Zealand’s success in addressing its housing shortage offers a potential blueprint for Australia.

New Zealand’s rapid construction boom, which has led to a surge in the number of construction workers, is now seen as a model.

The country’s construction sector employs 10.7 percent of the workforce, compared to Australia’s 9.3 percent. The increase in apprenticeships and overall workforce growth has boosted housing supply, lowered prices, and strengthened the economy.

New Zealand’s experience shows how targeted planning reforms prioritising housing development can alleviate affordability issues and spur job creation in the sector.

Delays in bringing land to market in Australia, however, add unnecessary costs, exacerbating housing affordability concerns.

Electoral Proposals to Tackle Housing Affordability

As the election approaches, both the federal government and the opposition have rolled out their plans to tackle the housing crisis.

In the latest move, the Albanese government on Feb. 16 announced to ban foreign investors from purchasing established homes for at least two years. It also said it will crack down on foreign land banking.

In November 2024, it introduced two policies aimed at helping 40,000 first-time homebuyers: the Help to Buy shared equity scheme and Build to Rent (BTR) tax incentives.

The Help to Buy scheme sees the government contribute 30 percent of a home’s price (40 percent for new builds) for buyers earning under $90,000 individually or $120,000 as a couple, with repayment due upon sale.

The BTR model encourages developers to build multi-unit rental properties, offering affordable rents for social housing.

Federal Opposition Leader Peter Dutton has put forward his own housing proposals, which include unlocking up to 500,000 homes through a $5 billion investment in infrastructure such as water, power, and sewerage at housing development sites.

Dutton also proposes freezing changes to the National Construction Code for ten years to ease supply constraints.

“We will boost housing supply, rebalance migration, incentivise first-home buyers, and take pressure off interest rates and rents,” Dutton said.