Builders face daunting mission to boost housing supply despite 'green shoots'

Builders say there are "green shoots" appearing in the rate of homes being built across Australia, but current construction remains well short of the target.

As the industry chases the government target of 1.2 million new homes over five years, planning reforms, falling interest rates and the expansion of the federal 5 per cent Deposit Scheme are all boosting business for builders.

But industry insiders and experts have told ABC News a combination of planning delays, skilled labour shortages and land prices stands in the way of solving Australia's housing crisis.

The federal government has said its effort to build more homes is "bearing fruit", with the Bureau of Statistics reporting a 12 per cent rise in dwelling approvals in September, up close to 30 per cent from a low point in February 2024.

New home sales are up 20 per cent compared to the same time last year, according to the Housing Industry Association.

"We think what's influenced that largely is a lot more confidence returning to the market," HIA's chief executive Jocelyn Martin said.

But calls for all levels of government to do more to boost higher-density development closer to city centres persist, with the hope that this could add thousands of new homes into the mix, and put downward pressure on home prices and rents.

Good tradies in short supply

The uptick in building activity has ironically exacerbated what builders say is their biggest challenge: finding people to get the job done.

The Housing Industry Association reports bricklayers are in the shortest supply, with tilers, carpenters and roofers close behind.

Regional areas face more acute shortages than cities.

That pushes up the time taken to build a house, as well as the price of site preparation trades, the latter jumping 8.4 per cent in the past 12 months.

On a busy Edmondson Park building site on the south-west fringes of Sydney, McDonald Jones Homes supervisor Brian Skinner said business had picked up, with more than 600 homes currently under construction across Sydney and the neighbouring Hunter and Central Coast areas.

"[But] every day, we're on the search for more trades to keep up with the demand of the framing."

Master Builders New South Wales executive director Matthew Pollock said the workforce shortage was a "perennial problem" for the industry.

He said post-pandemic government incentives for tradies to take on apprentices had dried up, and the number of apprentices had dropped accordingly.

"[We need] more investment into the workforce, particularly into TAFE and training, but also for employers to take apprentices on."

The construction sector's "persistent workforce shortage" has been confirmed in this week's report by Jobs and Skills Australia.

The Jobs and Skills Report noted a correlation with weak productivity growth, "indicating that poor skill matching may be compounding economic pressures".

It comes after the housing sector was identified by the Australian Bureau of Statistics as a contributor to the latest shock inflation rise.

"What the report shows is that inflationary pressure on the industry will come from capacity constraints in the labour market over the next 12 months," Mr Pollock said.

One of Mr Skinner's subcontractors, carpenter Adrian Ardito, said his employer AusView had taken on more than 30 apprentices in his time with the business —and among them, he was the only one who had completed his qualification.

"I feel like there's not a lot of people who like doing this work," Mr Ardito said.

McDonald Jones Homes chief executive Rob Douglas said the shortage of skilled labour should be addressed.

"[It is] still the number one issue that the building industry, not only in New South Wales but across Australia, needs to tackle," he said.

Housing Industry Association chief executive Jocelyn Martin said there was one massive, and largely untapped, labour force on our shores already: women.

"In a sector where you essentially are only attracting 50 per cent of the population, then inevitably you're going to have a skills shortage," Ms Martin said.

"We have to become more family-friendly.

"We're competing against industries where you can work from home, where you can have flexible working hours — you can't build a house from home.

"So we need a more modern approach, [and to educate women that] trades are one pathway, but design, planning, certification, we need all those skills as well."

'Land crisis' adds to housing issues

The price of land is another obstacle to housing supply, one that is worsening with every passing day.

Ms Martin said Australia faced not only a housing crisis but "a land crisis".

"As an example, a house and land package in Western Sydney now is around $1.7 million and last year it was around $1.6 million — it's really increased over the last 12 months."

Sydney builder Scott Beynon said many of his projects were profitable because he had bought land years ago, before land prices skyrocketed.

"The cost of the land, the cost of construction, a lot of them don't add up," he said.

"We've had clients that haven't proceeded with projects because of the funding and there's not a return that will satisfy the financiers to give a decent return on that project.

"You look at a lot of high-rise and medium-rise apartment buildings, they're not coming to the construction phase because of the cost of the land and construction."

Planning reforms unlock higher-density developments

While "red tape" has long been another major complaint from the housing industry, governments appear to be starting to listen.

State government reforms in Victoria and New South Wales this year have been applauded for speeding up development where it is in most demand.

Grattan Institute housing and economic security programme director Brendan Coates described it as a welcome shift in "the politics of housing".

"New South Wales and Victoria have unlocked the kind of high-density apartment buildings that we hope to see around transit hubs and other major commercial centres.

"Victoria in particular is allowing three-storey townhouses across much of the residential area of Melbourne," he explained.

"We estimate that those reforms unlocked nearly a million additional potential homes in Sydney and 1.6 million in Melbourne, the equivalent to a third of the existing dwelling stock in Sydney and two-thirds in Melbourne."

Mr Coates has led the team behind a Grattan Institute report released on Thursday that calls for similar reform across the country.

The report recommends relaxing state and local government planning controls that prevent density, including adopting low- and mid-rise housing standards and reviewing systems for heritage and character controls in high-demand areas.

The NSW and Victorian reforms have faced backlash from some residents and councils.

But builders who spoke to the ABC said simplifying planning was key to unlocking more homes — before land prices spiral further.

McDonald Jones Homes' Rob Douglas said planning laws needed greater consistency and transparency.

Some builders are heartened by Environment Minister Murray Watt's proposed reforms to the Environment Protection and Biodiversity Conservation Act.

HIA's Jocelyn Martin said it could remove "a lot of the duplication that exists in the process at the moment", where homes require approval across multiple levels of government.

"We have a saying — one house, one approval," she said.

"Once the block of land is approved for housing, we don't then necessarily have to turn around and then get another approval by another level of government because … it takes time, creates red tape, and inevitably adds to the cost."

Builders have also welcomed a move by federal, state and territory building ministers to pause any further changes to the National Construction Code, barring essential quality and safety measures.

"Every time we change those regulations, it creates complexity and slows down the construction process," Master Builders' Matthew Pollock said.

"While we're trying to boost supply and meet those targets, freezing the code so that we've got some certainty over the next four years will help us fast-track supply."

In the first year of the National Housing Accord, only 176,000 homes have been built — leaving a million to be completed by mid-2029.

"We have a choice to make in Australia," Brendan Coates said.

"Or are they going to be pushed increasingly out of our major cities or to the urban fringes and have poorer lives than their parents had?

"Ultimately, that is how we'll make housing cheaper, by making it more abundant."