It takes almost 50% longer to build a house now than it did four years ago, and build times for all home types are at their longest since records began in 2010, recent data shows.
The time it takes for a home to be built has risen substantially in the past few years due to several persistent factors, including material and labour costs.
Recent data from the Australian Bureau of Statistics revealed that average build times in the 2024 financial year were 13 months for houses, 16 months for townhouses, and 33 months for apartments.
While this reflects a 3%, 7% and 10% annual increase in build times for each respective property type, the growth since the pandemic has been a lot larger, especially for houses. It takes four months, almost 50% longer to build a home now than in 2020.
Build times for apartments and townhouses are around 20% longer.
For all property types, completion times are the lengthiest they have been in 15 years, and though there are signs of stabilisation for houses, completion times for townhouses and apartments have continued to increase over the past year.
This is due to increases in approval process times before building commencement, as well as actual construction times.
Given strong population growth over recent years and projected for the future, the continued lengthening of these build times is likely to exacerbate existing housing shortages across the country.
Though it is important to look at the downstream effects of this trend, it is also critical to understand the factors that are contributing to it so that appropriate policy changes can hopefully improve building conditions.
One of the main drivers of longer build times has been supply constraints of essential building materials.
From 2021, the price of material inputs into construction rose rapidly. They reached an annual growth peak of 17.3% in June 2022.
This was a result of global and domestic shortages in construction materials – especially steel and timber products which saw an annual growth peak of 42% in March 2022 and 24% in June 2022, respectively.
As they were key resources required to start a project, many homes were not only becoming more expensive to build but their timelines from commencement to completion were majorly extended.
Although supply chains have now moderated for most materials, their costs are still high and unlikely to return to pre-pandemic levels, with the impact expected to be felt well into the future.
For some materials such as copper, which are required for electrical components of a property, shortages still currently exist, which is likely prolonging build times.
Another leading factor of increasing build times is the shortage of skilled workers in construction.
According to Occupation Shortage Report from Jobs and Skills Australia, the construction industry had the largest undersupply of workers among all industries in the 12 months leading up to June 2024.
This has been a consistent trend from 2021 to 2024.
Although wages for those working in construction have increased considerably over the past few years, shortages have persisted.
This is partly due to an ageing workforce and heightened demand for housing as well as declining rates in apprenticeships within the industry.
Commencements of construction apprenticeships have fallen by 12% in the 12 months to March 2024 compared to the previous year.
The lack of labour has likely contributed to construction delays, with 85% of companies unable to find suitable workers. These trends are concerning given that the government has set an ambitious target to build 1.2 million homes over the next 5 years.
While these factors are drawing out national build times, there is some encouraging news when we look at build times at a state level.
Completion times for townhouses in Queensland and the Australian Capital Territory have decreased significantly by 16% and 32% from the 2023 to 2024 financial year, with South Australia also experiencing a slight decrease of 1%.
For apartments, Victoria build times have remained fairly stable in the past year while Queensland saw a 17% decline.
The reduction in build times in these states is positive news for residents and those looking to move there. However, in New South Wales, where apartment build times have increased by 17% or nearly 5 months, the outlook is less favourable. It is worth noting that apartment data is only available for NSW, Victoria and Queensland.
Queensland was the only state to see build times for houses decline between 2023 and 2024, but the national increase was slower than in the previous year – which may be an early sign that trends are starting to shift.
The historically long build times are likely to have major impacts on the housing market. If left unaddressed, the continuation of this trend will further exacerbate the current housing shortage.
One key focus could be to address labour shortages within construction through investing in and promoting apprenticeships in the industry or potentially looking into skilled migration.
Although there are some recent positive shifts in build times, more needs to be done to meet the housing demands of the growing population.
