Delays hammering home build times

Anthony Albanese has been told to reduce construction delays, which have blown out to 12 months, if he is to meet deliver 1.2m new homes by the end of the decade.

Master Builders Australia chief executive Denita Wawn.

Australia is experiencing a blowout in construction delays with fresh data revealing the average build time for a home has risen to nearly 12 months, driving up the costs of new dwellings in an already inflationary environment.

New data compiled by Masters Builders Australia based on an analysis of Australian Bureau of Statistics figures has revealed the average duration for a new home build – from approval to completion – lifted from 10.3 months in 2021-22 to 11.7 months in 2022-23, an increase of nearly 14 per cent.

Anthony Albanese now faces warnings that his target of building 1.2 million new homes across the five years to 2029 will not be possible unless dwellings can be built more quickly. MBA chief executive Denita Wawn told The Australian: “To realistically achieve this goal, we need to reduce the time it takes to build.”

The delays in build times have been increasing for years, with the percentage change in construction duration rising 31 per cent across the nation between 2009-10 (8.9 months) and 2022-23 (11.7 months).

The states with the most significant delays include Western Australia, where the duration of new home builds rose 58.6 per cent (from 10.44 months in 2009-10 to 16.56 months in 2022-23) followed by the ACT, which experienced a 57.3 per cent increase (from 7.02 months in 2009-10 to 11.04 months in 2022-23).

WA also experienced the largest year-on-year increase in construc­tion times, with new builds blowing out by nearly four months between 2021-22 and 2022-23 (12.69 months to 16.56 months).

Ms Wawn said the delivery of the new homes had been “obstructed by the combination of labour shortages, broken supply chains and other lockdowns”.

“This is on top of the already formidable set of impediments in the form of planning delays, insufficient land release and red tape,” she said. “These unnecessary delays to construction ultimately drive up the cost of building which has already faced inflationary challenges with building product prices and a tight labour market.

“Since the pandemic, building product prices have increased 33 per cent and 4.4 per cent in the last 12 months. While we are seeing a stabilisation of some building product prices, primarily around steel, some products such as cement continue to escalate.”

The MBA previously has forecast that new dwelling starts for 2023-24 are estimated to be 170,100 before rising to 183,200 in 2024-25, then lifting to 218,000 in 2025-26. The peak building group has said the government’s previous goal of building one million new homes by the end of the decade was within reach but warned the objective could be derailed by the passage of Labor’s industrial relations changes.

The MBA also has warned the IR bill before the parliament meant building costs and delays would continue to worsen, with increased risk of workplace disputation, reduced productivity and increased labour costs.

“There are fundamental questions governments should be answer­ing before passing legislation: will this address the cost of living or housing crisis, will this keep businesses open and people employed, will this improve productivity and economic growth?” Ms Wawn said. “We can’t see a ‘yes’ for any of these questions.”

The data released by the MBA on Wednesday also shows blowouts in construction times for new townhouses have increased from 13.5 months in 2021-22 to 14.9 months in 2022-23.