Modern Australian
Men's Weekly

.

Here’s why increasing productivity in housing construction is such a tricky problem to solve

  • Written by Martin Loosemore, Professor of Construction Management, University of Technology Sydney

This week, the Productivity Commission released its much-awaited report into productivity growth in Australia’s housing construction sector. It wasn’t a glowing appraisal.

The commission found physical productivity – the total number of houses built per hour worked – has more than halved over the past 30 years.

The more nuanced measure of labour productivity – which accounts for improvements in size and quality – has also fallen, by 12%.

Both measures put home-building productivity well behind the broader economy, something the report’s authors attribute to “decades of poor performance”.

We’ve known about this problem for a long time. The Productivity Commission’s report is well researched and makes some sensible recommendations.

Solving the underlying problem will require a coordinated approach between government, home-owners, construction companies and workers.

Measuring productivity

Housing can take many forms. However, from a productivity perspective, the process of development is essentially the same.

A general view of residential housing over the inner Brisbane suburb of Milton
The Productivity Commission created its own new estimates of dwelling construction productivity. Dave Hunt/AAP

In very simple terms it involves:

  • concept and initial design, feasibility, finance and business case development
  • land acquisition and due diligence
  • detailed design, development and building approvals
  • pre-construction planning and working drawings
  • construction project management
  • practical completion, final certificates and settlement, commissioning and handover.

There are no official estimates of housing construction productivity. So, the Productivity Commission used Australian Bureau of Statistics (ABS) data to create its own new measures to capture productivity across this entire process.

Falling or flat-lining productivity in this sector is a well-known long-term problem. Under the National Housing Accord, the federal government has committed to building 1.2 million new well-located homes by the end of this decade.

But in the first three months since the National Housing Accord was launched, only 44,884 homes were built across Australia. That’s about 15,000 fewer than the required quarterly target of 60,000.

The National Housing Supply and Affordability Council projects that new market housing supply will ultimately come in at about a quarter of a million homes below the accord’s target.

4 key problems

The report identified four key factors behind the malaise:

  1. complex, slow approvals, as well as delayed construction certificates and essential infrastructure connections
  2. lack of innovation and slow uptake of digital technologies and modern methods of construction
  3. the dominance of smaller building firms resulting in low economies-of-scale and project management challenges associated with supply chain fragmentation
  4. difficulties attracting and retaining skilled workers resulting in skills and labour shortages.

The report proposes seven reform directions in response. These centre on speeding up the planning approval process, investing in research and development, and increasing workforce flexibility.

General scene of a new home under construction in Melbourne
Slow approvals were identified as one key factor behind lagging productivity. Stefan Postles/AAP

Fixing things won’t be simple

The Productivity Commission’s report has brought a welcome focus on planning and approvals as a key element of easing the housing crisis.

It acknowledges that under-resourcing of agencies involved in the approvals process, such as local governments, has made the problem worse.

One issue with increasing the number of planning approvals processed is that you then need to have a construction industry that can build fast enough to keep up with them.

Currently, we don’t. Industry research shows since 2013, the number of workers within Australia’s construction workforce has increased by more than 25%. But they are working 2% fewer hours each year, and achieving an output that’s 25.4% lower.

Keeping an eye on quality

Amid any push to speed up approvals, we need to be mindful of the possible risks. Loosening building regulations can increase the risk of quality problems and inappropriate development.

If widespread across the industry, such problems can cause significant personal and economic harm to households, social and economic costs for society. They can also increase building costs, insurance premiums and strata fees.

This problem calls for a range of tools to reduce the risk of compromising on quality when regulations are loosened or changed. New South Wales has two key pieces of legislation in place that could act as a model for other states.

One allows owners to sue if a person who carries out construction work fails to exercise reasonable care. The other allows the Building Commission to investigate building work and require rectification of defects for up to six years.

NSW also has an independent builder trustworthiness rating scheme. This is known as iCirt and operated by credit rating agency Equifax.

Innovation isn’t a panacea

A major feature of the Productivity Commission’s report discusses the housing construction industry’s low innovation culture.

However, much innovation is hidden from view, since it occurs at the manufacturing stage. And innovation itself is not a panacea.

While calling for greater innovation seems obvious on the surface, research has shown its ability to increase productivity depends on a wide range of factors and is certainly not guaranteed. It can even increase costs and reduce quality and productivity if not managed effectively.

More holistic workforce planning

The report also highlights issues with attracting and retaining a skilled workforce. Issues include low apprenticeship take-up and completion rates, restrictive trade pathways, and large infrastructure projects drawing talent away.

This raises a bigger issue. Despite workforce planning across the industry by the Construction Industry Training Board the industry still seems to be constantly reacting to a skilled labour shortage rather than planning ahead to predict and prevent one.

Read more: Will new $10,000 apprentice payments help solve job shortages in construction? Not anytime soon

Authors: Martin Loosemore, Professor of Construction Management, University of Technology Sydney

Read more https://theconversation.com/heres-why-increasing-productivity-in-housing-construction-is-such-a-tricky-problem-to-solve-250048

Pizza Brisbane City: Your Ultimate Guide to Finding the Perfect Slice in the CBD

Brisbane's city centre has evolved into a vibrant culinary destination, and nowhere is this transformation more evident than in its thriving pizza s...

Maximising Your Savings: How to Choose a Competitive Savings Account in Australia

In today's economic climate, Australians are increasingly focused on making their money work harder. With interest rates fluctuating and living cost...

What to Know When Researching a Tummy Tuck on the Gold Coast

Body confidence is something many people seek to improve as they move through different stages of life. Pregnancy, weight fluctuations and ageing ca...

Employer of Record Services & Manpower Outsourcing — The Smart Solution for Seamless Workforce Management

Expanding into Asian markets can feel overwhelming for many Australian businesses, especially when hiring employees in regions like Singapore, Malaysi...

Why Far-Infrared Saunas Are Becoming a Must-Have in Australian Homes; Just What Is a Far-Infrared Sauna?

A far-infrared sauna uses far-infrared (FIR) wavelengths to heat the body directly instead of relying on high cabin temperatures. Unlike traditional...

Tax Accountants Melbourne: Expert Support for Compliance and Financial Efficiency

Taxation is one of the most critical — and often most complex — aspects of financial management. Whether you’re a business owner, property inv...

Pinboard: A Practical and Stylish Solution for Organisation, Display, and Inspiration

In homes, classrooms, and offices across Melbourne, the pinboard has long been a staple for organisation, communication, and creativity. Simple yet ...

Solar Panels Geelong: Powering Homes and Businesses with Clean, Renewable Energy

Across Victoria, and particularly in regional hubs like Geelong, solar energy has become an increasingly popular investment for those looking to red...

Hurstville Tutoring: Helping Students Reach Their Full Academic Potential

In a world where education is becoming increasingly competitive, students often need extra guidance to excel. For families seeking quality academic ...

A First-Time Author’s Guide to Eco-Friendly Book Printing in Melbourne

Congratulations! You’ve done the hard part: you’ve actually finished a manuscript. That alone puts you ahead of countless people who say they’ll...

The Paint Job That Sells Homes: Design That Speaks Value Before You Step Inside

A proper paint job can do much more than simply modernize the color of the walls; it can affect how implicit buyers view a home. In real estate, curb ...

Global Humanitarian Alison Thompson Named 2026 NSW Australian of the Year — Why First Aid Knowledge Matters

Global humanitarian Alison Thompson OAM has been named the 2026 Australian of the Year for New South Wales, recognised for her decades of frontline re...

Modern Roller Shutters and Electric Roller Shutters: Security, Style, and Smart Living

When it comes to home and business security, few solutions offer the same balance of protection, convenience, and style as modern roller shutters. D...

What Is a Plunge Pool? A Complete Guide for Australian Backyards

Plunge pools have become one of Australia’s most sought-after outdoor features, offering a stylish, compact, and refreshing escape for homes of all ...

Gas Ducted Heating: Efficient, Reliable, and Cost-Effective Warmth for Melbourne Homes

Melbourne’s winters are known for their biting cold, and maintaining a comfortable indoor temperature becomes a top priority for homeowners. While...

Common Commercial Leasing Mistakes and How to Avoid Them

Leasing a commercial property is a major commitment that can shape the future of a business. Yet, many tenants and landlords overlook key details th...

Laser Skin Tightening: The Non-Surgical Way to Restore Youthful, Firm Skin

As we age, our skin naturally begins to lose its elasticity and firmness due to reduced collagen and elastin production. For those seeking to restor...

Car Rental Mistakes Most People Make

Car rental appears to be easy, but most travellers unintentionally get stuck in usual pitfalls that incur unnecessary expense and tension. Unseen ch...