First brief in the Homes for Australia series
The Australian Government’s 2026 national housing and homelessness plan, Homes for Australia, is framed around six priorities.
The first is ‘building the homes Australia needs so housing becomes more affordable’.
AHURI's research library offers a substantial body of evidence and policy options directly relevant to this goal.
Here are some of the learnings from the library.
A recently released 18-month AHURI Inquiry into construction constraints generated ample evidence that Australia has a homebuilding productivity problem. Detached housing completions have barely changed in four decades, while build times have roughly doubled – from 5.4 months in early 2000 to 10.8 months by early 2024. Apartments, meanwhile, are not being delivered.
The Inquiry identified key constraints and how to fix them. The research team, drawn from seven universities and the Royal Institution of Chartered Surveyors, established two main points:
- The housing sector should be treated as a ‘system of systems’, where making changes to only isolated parts of the system (like planning regulation) will not meaningfully lift homebuilding.
- Market volatility is the biggest drag on both output and quality.
Addressing market volatility
Volatility hits homebuilding hard. The most recent boom and bust cycle saw the number of detached homes under construction increase by 50,000 and shortly after decrease by 20,000. The swings in apartment construction are even larger, recently falling by 30% after rising nearly 300% during the last boom.
The impacts are felt across the sector. In booms, costs spike, labour shortages develop, supply chains are disrupted, timelines blow out and there is increased pressure to cut corners. Downturns cause loss of knowledge and labour, wage suppression, and businesses leaving the sector. Boom-bust cycles also create a persistent barrier to industry-level improvement, because builders are too busy to invest during booms, and too uncertain to invest during busts.
To address market volatility, ensure the sector is dealt with as a system of systems, and ultimately get more homes built, the Inquiry proposed eight interconnected policy development options. These include methods of modernising regulatory frameworks, attracting and retaining skilled employees, providing support for research and development, and reducing market fragmentation. The last is particularly relevant, as sector fragmentation and the dominance of small and medium builders was found to significantly constrain homebuilding.
Growing building company sizes
Researchers found the number of building firms grew from 11,486 to 27,700 between 2007-08 and 2024-25. That matters because larger firms were found to be more efficient and better placed to develop quality assurance systems.
The Inquiry suggested encouraging standardisation of housing could give builders a steady flow of work and support the growth of larger firms. Establishing pipelines of larger-scale land development opportunities could also promote the growth of large builders.
Deploying government stimulus
The Inquiry urged caution on one common method used to increase homebuilding activity – government stimulus. A recent example is the HomeBuilder Grant, rolled out during the COVID-19 pandemic. The Inquiry found this stimulus assumed latent capacity that did not exist and hence drew unqualified workers into the sector.
The research did find that counter-cyclical social housing investment could help smooth demand, and an earlier AHURI Inquiry into financing first home ownership offered further guidance on deploying stimulus effectively.
That Inquiry’s Final Report, published in 2023, examined home-ownership promotion policies in Australia, Canada, Finland, Germany, Ireland, the Netherlands, Singapore and the UK. It found Australia had focused almost exclusively on demand-side measures (grants and tax concessions) while other countries leant more toward supply-side approaches. The Inquiry found Australia’s approach had enabled, and likely fuelled, mortgage credit demand and price increases.
The Inquiry made two clear recommendations: shift focus to supply-side measures and reform tax settings that disadvantage first homebuyers while benefiting existing owners. While demand-side measures have continued via the likes of the Help to Buy Scheme and 5% Deposit Scheme, there has been a shift from the Federal Government towards supply-side measures.
These include billions pledged to support delivery of 1.2 million homes via the National Housing Accord and $10 billion to increase social and affordable housing supply through the Housing Australia Future Fund, alongside other direct funding. Changes in the 2026 Federal Budget to the Capital Gains Tax Discount and negative gearing also align with the Inquiry’s second recommendation, suggesting this policy trajectory will facilitate more Australian households owning their own home.
A separate AHURI study, led by Curtin University, found investment that smoothed housing supply over a longer period, rather than offering a quick stimulus, would help the industry avoid capacity constraints. It also found stimulus targeted across the whole sector, not just for detached housing, would be more equitable.
Improving land availability
The same Curtin University-led research found efficient housing delivery depended on a steady supply of financially viable sites. This requires long term strategic planning by all levels of government and a mechanism where investment in infrastructure is coordinated and shared between government, landowners and developers. Shared investment is particularly relevant, as the costs of upgrading local infrastructure can prevent development.
Predicting where demand will be
AHURI has also investigated how available data can inform social and community infrastructure planning in greenfield areas. The study, conducted by University of Sydney researchers, found big data sources (including building growth, mapping, and travel time data) could enrich spatial and infrastructure planning in high-growth areas. However, the study also found difficulties with data sharing across agencies, and in translating insights into funding and delivery priorities. Further efforts to develop innovative measures for informing future infrastructure requirements could help prepare areas ahead of growth.
Ensuring planning rules are clear and consistent
An AHURI Inquiry into housing policies, labour force participation and economic growth found planning regulations had only a modest effect on supply responsiveness. For developers, the most important aspect of the planning system was the certainty and consistency of advice provided by planning officers. Even where planning controls were restrictive, if clear and applied consistently, developers could work with them to deliver housing.
Enabling diverse housing options
Increasing housing supply is one thing, making sure it is the right kind of housing and in the right locations is another. In 2021, AHURI engaged a panel of 50 housing and built-environment professionals to examine the barriers to delivering housing that is more diverse in terms of size and built form, tenure and affordability.
Although 97% of Australia’s new homes are produced by private developers, the study noted all levels of government could help de-risk desired diverse housing projects via subsidies, grants, access to special mortgage products for purchasers of diverse housing products, and special development assessment pathways. State and local governments could ensure land-use zoning allows for or requires a range of dwelling densities in different locations.
Despite growing policy interest in diversifying housing supply amid changing demographics and declining affordability, the study found most housing was still delivered as detached greenfield homes or high-rise apartments sold at market rates to owner-occupiers and small-scale investors. Panellists called for more medium-density options like townhouses, plus greater affordable ownership, rental, and social housing supply. If the objective of building the homes Australia needs does not also include social and affordable housing, then the stated reason for doing so – to make housing more affordable – will not be achieved.
For in-depth study findings, policy recommendations, and other insights into how Australia can build more homes, follow the research hyperlinks within this Brief, or visit AHURI.edu.au.
