Australia’s housing crisis is set to worsen as new home construction plummets to its lowest level in over a decade, according to industry experts.
Master Builders Australia Chief Economist Shane Garrett revealed that new home starts dropped 8.8 per cent to 158,690 in 2023-24, marking the worst year for home building since 2011-12.
“Detached house starts fell by 10.1 per cent, while higher density commencements were down by 6.0 per cent,” Mr Garrett said.
“If building continues at this pace, we’ll be in for less than 800,000 new home starts over the next five years.”
Mr Garrett said that this trajectory would result in a shortfall of over 400,000 homes compared to the National Housing Accord target.
The decline in construction activity coincides with a drop in apprenticeship numbers, further exacerbating the industry’s challenges.
Master Builders Australia CEO Denita Wawn said the shortage of apprentices would exacerbate the issue.
“Today’s data releases aren’t unrelated,” Ms Wawn said.
“To bring Australia out of the housing crisis we need to drastically increase the supply of housing.
“We can’t do that while we’re simultaneously suffering through a labour shortage.”
Ms Wawn said that low apprentice numbers reflect a shortage of skilled workers across all trades, hindering efforts to increase building activity and address supply conditions in the residential building market.
“It’s no longer appropriate to call for a return to pre-Covid levels, we need more tradies now than we’ve ever had,” she said.
The construction industry is facing multiple challenges, including cost escalations and concerns around interest rates and inflation.
Ms Wawn said it’s a difficult situation for builders, particularly small and medium-sized enterprises that make up 99 per cent of the industry.
“We’re seeing situations on which the cost escalations that, in many instances, are borne by the builder, because fixed price contracts are finding very low yields, and sometimes building at a loss,” she said.
To address these issues, Ms Wawn called for a collaborative effort between industry, state, and federal governments.
“We urgently need governments to look at solutions to increase the number of tradies, increase the number of apprentices, and help Australian builders increase supply so we can come out the other side of this housing crisis,” she said.
