construction-workers-on-wall-feature
Construction industry is still busy. Image – Canva.
  • Conditions for builders are incredibly challenging at the moment according to MasterBuilders.
  • The industry is marked by rising interest rates, robust cost pressures and labour shortages.
  • Despite this, the total volume of construction activity grew modestly (1.5%) during 2021–22.

The construction industry is failing to keep up with demand which is leading to more housing affordability and supply issues according to new data.

Master Builders Australia’s latest building and construction industry forecasts found that housing starts currently sit below the 200,000 per annum needed to meet demand between 2022 and 2025.

The number of new homes that are commencing building will fall to its lowest level over 2022-23 before rebounding in 2026-27.

Master Builders Australia CEO Denita Wawn said conditions for builders are incredibly challenging at the moment and that is likely impacting activity.

“The current environment is a difficult one for the industry marked by rising interest rates, robust cost pressures and labour shortages,” Ms Wawn said.

“Despite this, the total volume of construction activity grew modestly (1.5 per cent) to $215.1 billion during 2021–22.

Downward pressure required

“The challenge will be to make sure that we put downward pressure on building and construction costs to increase output.

“At present these challenges relate to supply of housing, workforce shortages – particularly key trades, bottlenecks in the market for key building materials and products, and increased costs from regulatory changes.”

Ms Wawn said not all property types are being impacted in the same way by the current shortages.

“Whilst detached housing and renovations are stable or steadily growing off the back of the COVID stimulus boom, medium to high density remains hardest hit,” she said.

“This segment is more sensitive to interest rate fluctuations and is still recovering from the absence of inward migration over the past three years.

“Even before the pandemic, higher density dwellings were in decline.”

According to Ms Wawn, the current housing crisis is leading to a huge gap in equality between those that can afford housing and those that cannot.

“The dream of owning and investing in housing is underpinned by a fair and equitable desire to improve social, economic and productivity benefits for the country,” she said.

“But in the current climate of economic uncertainty many are seeing this aspiration become too far out of reach with flow on effects across the economy.

“Struggles around housing affordability have persisted over many decades but with state, territory and federal governments committed to addressing the challenge, this key policy area needs to be at the forefront.

“While this represents a challenge, it also provides a real opportunity for bold reform to be advanced and for business and the communities in which they operate to be unshackled.”

Ms Wawn said Masters Builders Australia supports the Federal Government’s plan to address the current housing crisis.

“To achieve better housing affordability in the future, changes need to be made to the way we do things, now and over the long-term,” she said.

“To address these pressures, Master Builders recommends responses around housing supply, the construction workforce, supply chain risk and cost pressures, simplifying regulatory settings, and providing taxation settings that support investment in housing and productivity.”



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