Australia’s Housing Productivity Crisis: Why We’re Using Twice the Resources for Half the Output

I’ve been developing property since 1980. That means I’ve watched the whole arc of Australia’s productivity decline—from the baseline to where we are now.

 

The numbers tell a brutal story.

 

Housing construction productivity has declined by 53% since the 1994-95 period. Could you read that again? We now need twice the resources, effort, and cost to deliver the same housing output we achieved 30 years ago.

 

Meanwhile, the broader economy’s productivity increased by 49% over the same period.

 

The Real Problem Starts in the Classroom

 

People ask me when I realised this was systemic. The answer is simple: the day the education system introduced participation awards.

 

When you teach people from a young age that they get rewarded just for showing up, you create a workforce that expects payment without productivity. I see it every day on my 30-80 apartment projects.

 

Architects are putting lines on paper without critical thinking. Engineers who don’t look for ways to resolve problems. Consultants delivering mediocrity because they’ve never been taught that better performance means better rewards.

 

Competition drives people to strive for success. Remove competition, and you remove the incentive to excel.

 

The Cost of Mediocrity

 

Since 2013, Australia’s construction workforce has increased by more than 25%. You’d think more workers mean more output.

 

You’d be wrong.

 

Those workers are achieving output that’s 25.4% lower while working 2% fewer hours each year. We’re adding bodies but getting less productivity per person. That’s a death spiral no amount of hiring can fix.

 

Material prices tell the same story. Despite global markets softening, locally intensive Australian materials keep climbing:

• Concrete surged 6.57% year-to-date
• Plasterboard jumped 6.48% annually
• Bricks climbed 6.41% over the year

 

When projects run 50% longer and require double the labour, any savings from cheaper global materials are offset by extended site overheads and increased wage costs.

 

The Insolvency Wave

 

In 2024-25, construction insolvencies increased by nearly 21% year-over-year to 3,595 cases. That’s the highest level in a decade. In calendar year 2024 alone, 3,217 construction firms collapsed or entered administration.

 

This represents approximately 27% of all company failures nationally.

 

A builder said to me during the early 1990s recession: “I would rather sit at home and go broke slowly than go to work, work hard, lose money and go broke fast.”

 

I agree with him completely.

 

Why should I risk my money or my investors’ money on a project that won’t make money because market conditions are unfavourable, and the government won’t act to solve the housing crisis? Why wouldn’t I invest in other profitable industries?

 

The Solutions That Don’t Work

 

The government pushes modular construction as the solution. I’ve been trying to make modular projects financially viable for 15 years.

 

They don’t.

 

Building in a factory, shipping on trucks, craning into position, and connecting services costs more than building in place. Modular structures must support their own weight, as well as the loads imposed by the building above them. They must be constructed far more rigidly to withstand transportation.

 

The only advantages are speed and quality. But those come at a premium that makes projects financially unviable for most developers.

 

Meanwhile, large-scale developers invest heavily in build-to-rent. To break even or make small profits, they must charge higher than market rents. This forces property prices up and creates inflation.

The proposed solution exacerbates the crisis.

 

What Actually Needs to Happen

 

The government could drop the taxes that add more than 40% to the cost of delivering a house. If delivering housing is so important, remove these taxes to make projects viable. This would stimulate the economy through increased cash movement, boost GDP, and generate more tax revenue to offset the lost revenue.

 

But that requires political will.

 

On the workforce side, we need to revert to the education system from 20 years ago. We need to reduce government protection of employees terminated for poor performance or safety breaches. These people reduce productivity and must be removed from the workforce.

 

Long term, the answer may be robotics and automation to minimise unskilled labour on construction sites. Robots don’t need breaks after every eight-hour shift. Construction sites could operate 24 hours a day, seven days a week, completing projects in less time and potentially at a lower cost.

 

The Bottom Line

 

My advice to any property developer at any time is simple: conduct thorough feasibility studies and ensure your project is viable before committing. If it’s not feasible, don’t do it and invest your money elsewhere.

 

Everything I do is based on people first. I select people who have a mission in life and are willing to work hard to succeed, providing the lifestyle they deserve. Usually, these are other business owners who share my mindset and only employ like-minded people.

 

Productivity, always, in every facet of what we do, is driven by people.

 

You can create anything, but it all starts with people. Until we address the fundamental issue of workforce quality and government cost structures, we’ll continue to use twice the resources for half the output.

 

And the housing crisis will get worse.