Builders warn low productivity and high inflation is prolonging the housing crisis

New data from the Australian Bureau of Statistics showing a rise in inflation, coupled with a decrease in building and construction industry productivity, should be sounding alarm bells for Australian governments, warns Master Builders Australia.

New data released today shows an April increase in the annual inflation rate to 3.6 per cent and all three sectors of the building and construction industry reporting a March quarter drop in output.

The decline comes as demand for new housing continues to grow, with residential construction dropping 1.2 per cent, civil construction down 2.1 per cent, and non-residential building dropping a concerning 7 per cent.

Master Builders Australia’s Chief Economist Shane Garrett said these numbers are worrying, and that governments need to focus on reducing the cost of creating new homes and speeding up their delivery.

“Housing costs contributed significantly to April’s poor inflation result,” said Mr Garrett. “Over the past year, rents have risen by 7.5 per cent.

“High rental inflation is a direct result of years of underbuilding on the higher density side of the market, caused by a drastic lengthening in the build times for new homes, labour and material shortages as well as excessive homebuyer taxation.

“Labour shortages are the biggest constraint on building and construction activity, and we are also facing unfavourable changes on the Industrial Relations front as well as a new wave of regulation. Policies must change to reflect the urgency of this.

“The building and construction industry is the canary down the economic coal mine,” said Master Builders’ Chief Executive Denita Wawn. “When the industry is strong, the economy is strong. These figures should be sounding alarm bells for Australian governments of what’s to come.

“During 2023, civil construction became one of the main drivers of economic growth in Australia; this is now in reverse jeopardises economic growth.

“Residential building activity has slumped to its lowest levels in nearly two years at a time when communities are crying out for new homes.

“If we are going to undo decades of under-building and resolve this housing crisis, we need to change the economic environment to encourage investment across all sectors of the industry by reducing the cost of construction work, reducing build times, reducing planning delays and slow approval processes.”

Media contact: Dee Zegarac, National Director, Media & Public Affairs
0400 493 071 | dee.zegarac@masterbuilders.com.au