A recent report released on February 12, 2025, highlights a significant decline in productivity within Australia's housing construction sector, attributing this downturn to decades of poor performance and its implications for the ongoing housing affordability crisis.

The report reveals that housing construction productivity has plummeted, with physical productivity down 53% and labor productivity down 12% over the past 30 years, meaning fewer homes are being built per hour worked.

Since 1995, the sector has seen a 53% drop in productivity, indicating that for the same output, fewer than half as many homes are now being completed compared to three decades ago.

Compounding these issues, construction costs have surged by 40% in the last five years, while residential build times have increased by 80% over the past 15 years.

Complex regulations and lengthy approval processes are significant contributors to these delays, with some locales having planning regulations that span thousands of pages.

Key challenges affecting productivity include a slow approval process, lack of innovation, a fragmented industry dominated by small firms, and difficulties in attracting and retaining skilled workers.

To address these challenges, the report outlines seven reform directions aimed at enhancing productivity, focusing on streamlining approvals, fostering innovation, and tackling workforce issues.

Julie Abramson, a productivity commissioner, emphasizes that easing regulatory bottlenecks and promoting innovation in construction methods are critical to improving productivity.

Denita Wawn, CEO of Master Builders Australia, welcomed the report's recommendations and stressed the urgent need for a coordinated approach across all levels of government to tackle productivity challenges in the housing industry.

Mike Zorbas, CEO of the Property Council, supports the report's findings and calls for political unity to implement the recommended reforms to alleviate the housing deficit.

Policymakers are urged to find a better balance between the benefits of regulation, such as environmental protection and building safety, and the negative impact on construction productivity and housing affordability.

The report also highlights the negative effects of government policies on construction productivity, including slow regulatory processes and inconsistent policies across jurisdictions.