Productivity Commission calls for urgent housing reforms
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The news: Home-building productivity in Australia has plummeted 53% over the past 30 years, while build times have blown out, prompting the Productivity Commission to call for urgent reform.
The numbers: The Commission’s report, Housing construction productivity: Can we fix it?, found that productivity in home building has fallen 53% since 1995, while labour productivity in the broader economy has risen 49%.
Over the past decade, the average build time for a detached house has increased from 6.4 months to 10.4 months, for townhouses from 9.4 months to nearly 13 months, and for apartments from 18.5 months to 27.8 months.
The context: Labor’s goal of 1.2 million homes by 2030 appears unlikely, with just 173,000 completed in 2023, well below the 240,000 annual rate needed, according to Deloitte Access Economics modelling.
The Commission blamed sluggish approvals, excessive regulation, a lack of innovation and skills shortages for the building delays, urging a review of the National Construction Code and other reforms.
The Commission also urged governments to set up coordination bodies to accelerate development and construction and reduce delays. It recommended an independent review of building regulations and the removal of obstacles to adopting innovative methods like modular housing.
It also called for a national approach to occupational licensing to improve workforce mobility.
What they said: Chair Danielle Wood said the "sheer volume" of red tape had "a deadening effect" on home building.
“If governments are serious about getting more homes built, then they need to think harder about how their decisions unnecessarily restrict housing development and slow down the rate of new home building,” she said.
“There is no single thing to blame for this poor productivity performance. But there are steps that governments could take to remove or ease regulatory bottlenecks and encourage innovation in an industry where the way we build homes has barely changed,” said PC Commissioner Julie Abramson.
Master Builders Australia backed the findings, warning that delays in reform will prolong the housing crisis.
The sources: Productivity Commission, Master Builders Australia statement
