The Housing Productivity Challenge in Australia
Australia is facing a housing affordability crisis. Under the National Housing Accord, governments have pledged to build 1.2 million homes in five years — 240,000 homes each year. Yet in the 12 months to June 2024, only 176,000 were built, leaving a growing supply gap.
The Productivity Commission’s 2025 report makes one thing clear: productivity in housing construction has been stagnant for three decades. Without reform, the supply shortfall could reach 257,000 homes by 2029.
Housing Construction Productivity: The Numbers
Output per worker is falling: Dwelling completions per hour worked are down 53% since 1994.
Labour productivity is flatlining: Adjusted for home size and quality, it has declined 12%, while the broader economy grew 49%.
Build times are blowing out: Detached homes now average 10.4 months (up from 6.4 a decade ago). Apartments take nearly 28 months.
Detached housing is hardest hit: Productivity has dropped 25% since 2001, compared with a 5% rise in higher-density housing.
Industry remains fragmented: Average residential construction firms employ fewer than two people. The four largest firms combined hold just 12% of market share.
Why Productivity Matters for Builders, Trades, and Suppliers
The report ties poor productivity directly to affordability, costs, and project viability:
- Builders struggle with delays, slim margins, and project uncertainty.
- Trades face skills shortages, inconsistent licensing, and wasted time on manual admin.
- Suppliers battle unpredictable demand, disconnected procurement, and limited forecasting visibility.
If productivity doesn’t improve, it isn’t just a government target missed — it’s fewer projects, higher costs, and tougher conditions for every business in the industry.
“Explore BuiltGrid for Builders”
Barriers to Housing Construction Productivity
1. Complex Approvals and Cascading Failures
Projects can take 5–10 years to move from land acquisition to handover. Delays in approvals or utility connections trigger knock-on delays across the build sequence.
2. Industry Fragmentation and Lack of Scale
Small firm dominance limits economies of scale. Each project is run differently, making it hard to carry lessons forward or standardise processes.
3. Low Innovation and Digital Uptake
Only 35% of construction firms are innovation-active. Digital procurement and prefabrication remain niche (<5% of builds).
4. Heavy, Inconsistent Regulation
The National Construction Code (NCC) has grown beyond 2,000 pages. Frequent changes and state-by-state inconsistencies deter innovation and increase compliance costs.
5. Workforce and Skills Gaps
Apprenticeship commencements have stagnated, licensing varies by state, and migration pathways remain costly and slow.
What the Industry Needs to Do Now
While governments must act, the Commission is clear: industry also needs to adapt.
Builders should:
- Digitise procurement and approvals processes.
- Involve trades and suppliers earlier to avoid cascading failures.
- Standardise project workflows across sites.
Trades should:
- Upskill in digital platforms and modern methods of construction.
- Push for consistent licensing across states to increase flexibility.
- Position themselves as project partners, not just subcontractors.
Suppliers should:
- Improve transparency on inventory, costs, and lead times.
- Integrate quoting and supply workflows into digital platforms.
- Scale reach by tapping into connected marketplaces.
Connected Procurement: A Practical Productivity Solution
The Commission identifies fragmentation, inefficiency, and delays as core productivity challenges. Connected procurement solves these:
- Coordination across the chain: Builders, trades, and suppliers connect on one platform, reducing duplication.
- Faster procurement cycles: Tenders issued and responses received in days, not weeks.
- Built-in compliance: Risk profiles, licensing, and certifications are automated.
- Shared scale: Even small firms gain the efficiencies of being part of a connected network.
- Incremental digital adoption: Easy-to-use tools embed efficiencies into daily workflows.
Why BuiltGrid Exists
BuiltGrid was created to solve the exact problems raised in the Productivity Commission’s report.
- 10x faster procurement cycles — eliminating bottlenecks.
- Access to verified networks — connecting builders, trades, and suppliers.
- Transparency and trust — with compliance built in.
- Scalable efficiencies — so even small firms can compete at big-project pace.
Our mission:
Quote smarter. Build faster. Deliver the homes Australia needs.
Conclusion: From Policy to Practice
The Commission’s message is clear: without productivity reform, Australia cannot build its way out of the housing crisis.
- Governments must streamline regulation, support innovation, and expand the workforce.
- Industry must embrace collaboration, digital tools, and new ways of working.
- Connected procurement provides a practical, immediate path to higher productivity.
At BuiltGrid, we believe the answer is simple:
Smarter procurement. Faster builds. A connected industry.