Supply barriers blunt new housing initiatives

House under construction. | Newsreel
Australia faces a shortfall in housing needs of more than 110,000. | Photo: ANNVIPS (IStock)

An 18 percent drop in productivity in the construction sector and a skills shortage means the nation faces a large shortfall in housing needs.

Master Builders Australia said despite a myriad of Federal Government housing initiatives, Australia was on track to fall over 110,000 homes short of its National Housing Accord target.

Its 2024 building and construction industry forecasts predict around 1.09 million new home starts between July 1, 2024 and June 30, 2029, short of the Accord’s 1.2 million target.

Master Builders Australia CEO Denita Wawn said productivity in the industry had fallen 18 percent over the past decade.

“It’s clear that governments need to expedite the rollout of planning reforms to reduce the high costs and time it takes to build,” Ms Wawn said.

She added that the full impact of the Closing Loopholes Bills and union pattern bargaining negotiations under way in several states had not been factored into the forecasts.

Ms Wawn said with inflation easing and growing expectations of an interest rate cut, a favourable investment market was looming.

“The Federal Government has also announced a number of significant housing measures that focus on increasing supply in social and affordable housing and the rental market,” she said.

“However, constraints on the supply side like workforce shortages, industrial relations changes and a poor planning system counter the full effectiveness of these measures.”

Workforce shortages continued to be the biggest challenge for the industry across all sectors.

“At a Federal level, the government’s priority should be growing the building and construction workforce,” Ms Wawn said.

“We heard only recently from BuildSkills Australia that the industry needs 90,000 workers in the next 90 days.

“Domestically, we cannot fill this gap. We need to think outside of the box with better apprenticeship incentives, reskilling migrants already in Australia, and a targeted international campaign to bring in skilled migrants.”

She said investment and support in the whole built environment was important.

“While the commercial and civil construction sectors have helped shield the economy from periods of negative economic growth, this is coming to an end.

“We can’t build the homes we need without the appropriate commercial and civil infrastructure to support it. This includes critical infrastructure such as utilities.”