11/06/2026
🚨 HOUSING TARGET "A PIPE DREAM"? 🚨
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The landmark report from the Australian Housing and Urban Research Institute (AHURI), led by Associate Professor Andrea Sharam of RMIT University, marks a comprehensive, 18-month "system-level" analysis of Australia's homebuilding industry. Compiled by 19 researchers across seven universities, the report explains exactly why the National Housing Accord's target of building 1.2 million homes by June 2029 is a structural impossibility without radical reform.
The report exposes several deep-seated, systemic barriers that explain why the target is slipping out of reach:
1. The Destructive "Boom-and-Bust" Cycle
The primary constraint on housing output isn't a single bottleneck like the planning system; it is extreme market volatility. The industry exists in a paradox: builders are "too busy to invest during booms, and too uncertain to invest during busts."
The Boom Phase: When demand spikes, costs surge, labor shortages hit, and supply chains fracture. To capitalize on the rush, builders take on more work than they can realistically deliver. This forces them to hire under-skilled workers and marginal operators, leading to task queues, blown-out timelines, and intense pressure to cut corners on build quality.
The Bust Phase: When the market cools, the industry suffers a permanent loss of skilled labor, wage suppression, a decline in innovation, and widespread business insolvencies.
Australian Housing and Urban Research Institute
The Backlog Trap: The massive backlogs created during a boom are rarely fully cleared during the subsequent downturn. As a result, builders enter the next economic up-cycle already severely constrained and logistically overwhelmed.
2. Extreme Volatility by Housing Type
The report outlines how erratic shifts in demand prevent the industry from scaling up smoothly:
Detached Housing: In busy years, the number of detached homes under construction spikes by about 50,000, only to plummet by 20,000 in quiet years. Strikingly, the actual completion rate for detached housing in Australia has barely changed in over four decades
Apartments and Multi-Units: High-density construction is even more volatile. The apartment boom of the 2010s saw a staggering 300% increase in construction, which was immediately followed by a 30% collapse after tighter prudential regulations were introduced and Chinese investment was withdrawn. Today, apartments are taking significantly longer to build.
3. Industry Fragmentation and Subcontracting
The structure of Australia's construction sector fundamentally limits productivity gains:
Australian Housing and Urban Research Institute
Between 2007–08 and 2024–25, the number of building firms in Australia exploded from 11,486 to 27,700, signaling massive industry fragmentation.
While larger building firms possess the scale to operate efficiently, small and medium contractors deliver most of Australia’s detached homes and half of its apartments.
These smaller builders rely heavily on temporary subcontractor teams. Because these teams completely disband after a project is finished, the chain of skills transfer, institutional knowledge, and long-term training is broken. Furthermore, low profit margins and poor capitalisation force small builders to prioritize speed and lowest-cost options over long-term innovation.
What the Researchers Recommend
Dr. Sharam and her team argue that the federal government must stop treating housing as isolated pieces and view it as an interconnected "system of systems." To fix the structural deficit, the report outlines several critical policy shifts:
Stop Stimulating Short-Term Demand: Governments should avoid cash grants or policies that artificially pump up demand, as this simply mimics boom conditions and feeds price inflation without expanding actual building capacity.
Counter-Cyclical Social Housing Investment: Instead of funding private demand, governments should aggressively fund and build social housing during market downturns. This would act as an economic stabilizer, keeping builders solvent and tradespeople employed so industry capacity isn't wiped out before the next cycle.
Australian Housing and Urban Research Institute
Harmonise the Building Code: Modernize and strictly unify the National Construction Code across all state and territory jurisdictions while tightening regulation enforcement to prevent corner-cutting.
Australian Housing and Urban Research Institute
Fair Risk-Sharing Contracts: Standard building contracts should embed transparent cost-escalation provisions so that unexpected material and labor price spikes are shared more fairly, rather than forcing builders straight into liquidation.