Australia promised to build 1.2 million homes but builders are reaching their limits

Builder Jay Perham in Brisbane, Australia, was forced to pour cement at a housing site during the night because he couldn't find workers to do the work when the sun came up.

Then, quality problems arise. Perham, the manager of Axiom Construction, said that you can't see at night. "The last three or four pours that I have made were all at night and we had head torches on and lamps." Brisbane, the host city for 'the 2032 Olympic Games, will see around A$7billion ($4.93billion) in Olympic-related construction. This will add to the existing shortage of workers. The construction of houses and apartments in Brisbane, and throughout Australia, is taking longer and costing more. This, according to builders and analysts, undermines the government’s promise to build 1.2 million homes by 2029.

The National Housing Accord's five-year goal, which was agreed upon with state governments and the industry, is at the heart of Prime Minister Anthony Albanese’s strategy to solve a housing shortage in all 50 states. The plan combines federal funding of billions with state commitments for fast-track approvals and rezoning, as well as land releases to allow new developments.

Official data show that two years after the agreement was signed, the number of completed homes is 27% lower than the average of 60,000 per quarter needed to reach the target.

Hal Pawson is a professor emeritus of housing at University of New South Wales. He said: "We can clearly see that the annual house building numbers in Australia are not enough to reach the 1.2million target."

The capacity of the construction sector is at its limit.

Pawson said that while construction progress is varying across the country, it is especially difficult in Sydney, Australia’s largest city and the one of the least affordable cities for housing.

Clare O'Neil, the Australian Housing Minister's spokesperson, acknowledged that there were challenges in achieving this "deliberately aggressive" target.

The spokesperson stated in an email that the solution to these challenges was to "keep doing all we can to build homes faster".

STALLED CONSTRUCTION The construction bottlenecks are threatening to make housing more expensive and highlight the challenge that many wealthy countries face in building enough homes, when there is a shortage of workers, infrastructure and material. The market has been cooled by major reforms announced in may that ended the types of tax breaks for property investments often blamed for driving up house prices.

According to Cotality, property consultants, auction clearance rates have reached a six-year low and the average price of a property has dropped by about 2% over four months.

Builders argue that this has not done much to alleviate the supply shortages that have plagued industry in waves ever since the COVID-19 epidemic.

Michael Hopkins, a lobbyist for the industry, Master Builders Queensland said that it had shifted the discussion from boosting supply to taxation. This was not helpful. "We should talk about how to boost our workforce and how to streamline our redtape and regulations."

Official data revealed that new dwelling starts in Australia declined by 11.2% in the first quarter 2026 compared with the previous quarter. Year-on-year growth also slowed to just 0.2%, down from 26.1%. The apartment construction sector was the largest drag on the economy, with a decline of 20.7% in the first quarter. House construction declined by 3.5%.

Master Builders Australia reports that a new apartment takes 33 months to complete, compared with 21 months 10 years ago. A house, on the other hand, takes 11.5 month, compared to 8.6 months during the same time period.

According to the data shared by Urbis, a consultancy in Australia, almost 70% of apartments approved since 2020 are still not under construction. Data from Urbis revealed that the Gold Coast, in Queensland, had the worst backlog, with 83% of apartments yet to be built, compared to 64% in Sydney, and 62% in Melbourne.

Mark Dawson, Urbis housing sector leader, said that the rise in construction costs is a major factor affecting the affordability of apartments.

Housing Industry Association (HIA), an industry group that represents builders, predicts Australia will miss its 2029 housing goal by approximately 15%.

Don't help supply during a downturn

Perham, a Brisbane resident, said that the price of concrete has increased by nearly 150% over the last six years. Plaster board prices have risen 46%, and pine frame prices rose 35%.

Rami Issa of Roar Constructions in Sydney says that rising costs are reducing margins and many construction companies are struggling to breakeven. Issa does more of the work himself to cut costs.

"I never used the tools before." He said, "I used to run the site but now I am?jumping with the boys on the tools to reduce the number of working hands."

The industry is already feeling the squeeze of cost pressures.

The data of the corporate regulator revealed that in the financial year ending June 30, 3472 construction companies entered into insolvency proceedings and appointed external administrators for a first time. This is down from 3,596 a year earlier but up from 2,977 a year ago.

Australia's official?rate of cash is now 4.35%. It has been increased three times since 2026.

Builders are bracing themselves for another drop in demand, as another rate increase is possible before the end of this year.

Kenan Yazici is the general manager at Betacon Construction, a construction company in Sydney. He believes that the paradox of the boom-and bust cycles in Sydney is the fact that a downturn doesn't necessarily make the housing market more affordable.

He said that when interest rates rise, people tend to pull back on development. This results in fewer projects being launched.

"All of a suddenly, interest rates begin to drop. The property market is booming. Guess what? "There's just not enough to go around."

(source: Reuters)