Building new homes has been a challenge in recent years, and that’s showing up in how many homes we are (or aren’t) building in Australia.
Construction activity remains well behind the target to construct 1.2 million homes over the five years to 2029.
Recent data from the Australian Bureau of Statistics (ABS) shows little sign that has changed: we’re building in the order of 43,000 to 44,000 homes per quarter.
That pace is around 25-30% below the pace we’d need to hit the government’s target of 1.2 million homes over five years.
But the good news is one of the big headwinds that residential construction has been facing looks to be abating.
The time it takes to build detached houses, including townhouses, has finally started to fall after a big increase during the pandemic.
The average time it takes to build a detached house - from work first beginning on site to completion - jumped from a very consistent 6.5 months in the decade before the pandemic to 10.5 months by the 2023/24 financial year.
This was driven by many factors, but key among them include difficulties sourcing raw materials, rapid increases in costs, and difficulties sourcing labour.
While these are not all solved problems, conditions appear to be heading in the right direction, with the time to build coming down to 9.2 months in the 2024/25 financial year.
It’s still higher than pre-pandemic, but we’re headed in the right direction.
It’s worth noting that the same is not true for the time it takes to build apartments, which has continued to increase.
However, the time it takes to build apartments is more affected by the types of projects being built compared to detached houses and townhouses, which makes it a little harder to interpret. For example, bigger apartment projects should take longer.
With the labour market easing, many large state infrastructure projects starting to wind down, and construction costs no longer racing away, many of the challenges facing the construction industry are not as acute as they were.
That should see the time it takes to build homes continue to decline towards more normal levels over the coming years.
