Australia’s 1.2 Million-Home Target Slips Further as Construction Bottlenecks Bite
Synopsis
Builders are struggling with labour shortages, rising costs and stalled developments, putting the government's 2029 housing target at risk as construction runs well below the required pace.
Australia’s plan to deliver 1.2 million new homes by 2029 is coming under increasing pressure as builders contend with a shortage of workers, higher costs and growing delays. Both houses and apartments are taking longer to complete and costing more to build.
Brisbane expects to see about AU$7 billion in Olympic-related construction ahead of the 2032 Games, potentially adding further pressure on an already tight labour market.,
Construction Industry Under Pressure
Official figures show that home completions are 27% below the 60,000 homes that need to be completed every quarter to meet the government’s target. Hal Pawson, emeritus professor of housing at the University of New South Wales, said the industry’s capacity was under significant strain and approaching its limits.
New dwelling commencements fell 11.2% in the first quarter of 2026 from the previous quarter. Apartment construction dropped 20.7%, while house construction declined 3.5%.
According to Master Builders Australia, constructing an apartment now takes around 33 months, compared with 21 months a decade ago. Building a house takes about 11.5 months, up from 8.6 months.
Urbis estimates that almost 70% of apartments approved since 2020 have yet to begin construction. The proportion was even higher on the Gold Coast at 83%, compared with 64% in Sydney and 62% in Melbourne.
Rising Costs Add to Delays
Builders are also dealing with significant increases in material and labour costs. Perham said Brisbane concrete prices had climbed almost 150% over six years, while plasterboard had increased 46% and pine frames by about 35%.
Michael Hopkins, deputy chief executive at Master Builders Queensland, said the industry needed more workers as well as less red tape and regulation to increase housing supply. The Housing Industry Association forecasts that Australia will roughly fall short 15% of its 2029 housing target.
Financial Pressure on Builders
Construction companies are also under financial strain. In the year ended June 30, 3,472 construction businesses entered insolvency proceedings, compared with 3,596 the previous year and 2,977 two years earlier.
Australia’s official cash rate currently stands at 4.35%, following three increases in 2026. Builders are preparing for the possibility of another rate increase before the end of the year, which could put additional pressure on housing demand.
The federal government has acknowledged the challenges surrounding the housing target, but says it remains committed to increasing the pace of construction.
Source: Reuters
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