The Productivity Commission says decades of poor performance in dwelling construction has exacerbated the housing crisis ... and reversing this trend could provide new solutions.
It has released a report that compares the number of hours worked in the sector with the number of new homes built, finding productivity has dropped 53 per cent since 1995.
That means half as many homes are being delivered relative to the number of hours worked, compared to three decades ago.
Danielle Woods is the Productivity Commission Chair.
"You know, that's pretty extraordinary. Normally, we expect to see productivity of sectors rise over time. What that means is, it takes longer and it's more expensive to build a house than it should be, and that contributes to the broader challenge that we face around housing affordability."
As state and federal governments struggle to reach their commitment to building 1.2 million homes before the end of this decade the report will make for a sobering read.
Experts say there are fewer dwellings coming online, and that drives prices higher, with the most recent statistics showing new builds are not on track to meet the target.
Philip Thalis is a Professor of Practice in Architecture at the University of New South Wales.
"Yes, approvals are down, but the approvals aren't the measure. The actual measure is how many completions there are of construction. And yes, there's a huge shortfall in planning approvals, but there's an even more acute shortfall after that in terms of completions, and that is the problem."
The Productivity Commission points to a range of issues which sit beneath that: a lack of innovation and scale, with the sector dominated by smaller firms, as well as workforce issues.
Housing Industry Association agrees Chief Economist Tim Reardon agrees that labour shortages which worsened during the pandemic continue today.
"Ongoing labor shortages are seeing price increases for the cost of skilled tradespeople, and that does add to the cost of building a new home."
He's calling for more access to overseas workers as a measure to supplement ongoing support for the Australian apprenticeships system.
But perhaps the biggest issue identified by the report is a complex and cumbersome system of regulations.
Danielle Wood explains.
"We've got a lot of regulation now, much more so than we would have seen 30 years ago, and a lot of overlapping regulations between local government, state governments, and to some degree, the federal government as well."
Mr Reardon says the Housing Industry Association would like to see the regulatory system streamlined as well.
"We certainly call on the housing minister to support the key recommendation in this report, which is an independent review of the growth and red tape and regulations that are constraining productivity growth in home building. "
An important intervention from Australia's independent research and advisory body which could help address one of the country's most pressing problems.
