This article is from the Australian Property Journal archive
AUSTRALIA has recorded its worst 12 months for new home builds in a decade and experts are calling for more action on labour shortages that have drained construction capacity, as the nation embarks on its ambitious National Housing Accord amid an ongoing housing crisis.
Australian Bureau of Statistics showed that new housing starts fell 8.8% in FY24, to 158,690 new starts.
Detached house starts fell by 10.1%, while higher density commencements were down by 6.0%.
National cabinet’s National Housing Accord officially kicked off in July with the aim of delivering 1.2 million “well-located” homes across the country over five years. If building continues at its FY24 pace, Australia will see less than 800,000 new home starts in that period – a shortfall of over 400,000 homes.
The rental market continues to see extremely low vacancies and high rents, while surging house prices over recent years have led to chronic affordability barriers.
New starts numbers like yesterday’s release have not seen since 2011/12. Recent data from the ABS suggested that the worst may be over for approvals, but construction capacity constraints are likely to provide a drag on any recovery.
Oxford Economics Australia has forecast total dwelling completions to total 940,000 over the five years to the middle of 2029, with lumpy results between the states and territories.
Labour shortages are proving the biggest impost, while building costs remain elevated with upside risk. In Brisbane in particular, there is going to be the major risk leading up to the 2032 Olympics and Paralympic of competition for both labour and materials between housing and a $7.1 billion infrastructure construction program.
BuildSkills Australia estimates the country faces the impossible task of finding 90,000 extra tradies to meet the government’s housing program targets.
The National Centre for Vocational Education Research has just released apprenticeship numbers that showed completions fell 8.6% from 24,545 in the year to March 2023 to 22,420 to March 2024.
In the same period, apprenticeship commencements dropped 11.8% from 47,110 to 41,520, and the number of apprentices in training declined 2.2% from 124,280 to 121,530.
Master Builders Australia CEO Denita Wawn said the new data painted a concerning picture for Australia’s housing crisis, and said the data releases “aren’t unrelated”.
“To bring Australia out of the housing crisis we need to drastically increase the supply of housing, and we can’t do that while we’re simultaneously suffering through a labour shortage,” she said.
“Low apprentice numbers reflect a shortage of skilled workers across all trades, and until we’re able to address the challenges facing the future of the workforce, we won’t be able to increase building activity and reduce the impact of supply conditions in the residential building market on Australia’s inflation problem.”
May’s federal budget included a $91 million investment to increase the building and construction workforce numbers.
“It’s no longer appropriate to call for a return to pre-COVID levels, we need more tradies now than we’ve ever had,” Wawn said.
“We urgently need governments to look at solutions to increase the number of tradies, increase the number of apprentices, and help Australian builders increase supply so we can come out the other side of this housing crisis.”
The UDIA said that with feasibility and economic conditions deteriorating, pressure on household budgets and increasing infrastructure costs making it harder to start building new homes, “the likelihood of any fast increase to housing is looking more like a distant dream”.
It said the NSW government’s Transport Oriented Development policies are welcome but are “yet to yield any substantive results and will take more time”.
Sydney Olympic Park will undergo its biggest transformation since the 2000 Olympic Games, with the Minns NSW government announcing it has given the tick of approval for a metro station precinct that will deliver up to 490 new homes.
“More transport sites like today’s announcement about Sydney Olympic Park should be fast-tracked so we can build more homes and better utilise transport infrastructure that has already been built,” the UDIA said.
