Australia’s housing construction industry remains in the grip of one of the worst shortages of tradespeople for at least the past twenty years despite a slowdown in new home construction, new data shows.

Released last week by Housing Industry Association, the March Quarter HIA Trades Report provides quarterly review of the availability of skilled trades which are pivotal to the residential building industry.

Overall, the report found that the HIA Trade Availability Index moderated slightly from -0.64 in the December quarter to -0.58 in the March quarter.

(Index numbers range from +2.0 to -2.0. Any reading below 0.0 represents a shortage in trade availability.)

At this level, the shortage of trades is less severe compared with any other time in the past three years.

However, the latest reading still represents one of the most acute trade shortages since HIA first published its report in 2003.

Each of the thirteen trades which are tracked in the report remains in short supply.

The most acute shortages are evident in bricklaying, ceramic tiling, plastering, carpentry and roofing.

Meanwhile, trade prices increased by 6.2 percent over the year to March.

Particularly strong increases are evident in finishing trades such as landscaping (+9.7 per cent), painting (+9.1 per cent) and plastering (+8.3 per cent).

This reflects a large number of homes which are in the construction pipeline but are drawing toward completion.

The latest data shows that severe trade shortages persist despite the weakest level of new detached home commencements across calendar 2023 for more than a decade.

Partially, this reflects a significant volume of work which remains in the housing pipeline despite the slowdown in new commencements.

Nevertheless, HIA Senior Economist Tom Devitt said that the housing construction sector is competing with other sectors that have been absorbing a significant number of skilled trades.

That includes public infrastructure projects as well as mining projects and other non-residential developments.

“Even with home building pipelines shrinking rapidly under the weight of the RBA’s rate hikes, public infrastructure projects have been absorbing a lot of skilled trades, as have mining and other non-residential projects,” Devitt said.

“As a consequence, improvement in trades availability stalled for much of last year and the prices of these trades are continuing to rise much faster than usual.”

Going forward, Devitt expects trade shortages to gradually ease further as the pipeline of work continues to contract and overseas workers continue trickling in.

However, he believes that pressure on trade prices will remain amid strong competition for workers from other parts of the construction industry.

As for the return of overseas migrants, he says that many of these have in fact been students rather than skilled tradespeople.

The latest data has raised concern that Australia may not have a sufficient number of skilled tradespeople to deliver upon the national housing target of 1.2 million new homes over a five-year period from 1 July 2024 which is set under the National Housing Accord.

To meet that target, the nation would need to deliver an average of 240,000 homes per year or 60,000 homes per quarter.

In calendar 2023, the nation commenced only 172,725 homes – well short of what is needed to achieve target.

With the shortage of trades persisting at this level of commencements, there is concern about where the additional workers will come from if the nation is to deliver 240,000 homes per year.

In light of this, Devitt has called for policy action in two areas.

First, he has called for the Commonwealth to maintain assistance which is offered to employers who directly train workers.

This call comes as the Government earlier this year announced a review into the Australian Apprenticeship Incentive Scheme that was established by the previous Coalition Government as part of the nation’s COVID economic recovery.

This offers wage subsidies paid to employers and direct payments to apprentices who are on the Skills Priority List as well as hiring incentives for employers of apprentices in non-priority occupations.

Under current plans, new arrangements which are set to come into effect in July will see a more limited form of up-front support which is afforded only in respect of apprentices who are employed in occupations that are on the skilled priority list.

Beyond that, Devitt says the Government needs to allow the building industry to access skilled labour from overseas.

Whilst he welcome’s last year’s announcement of the creation of a special type of visa for skills in demand, Devitt has raised concerns that several trades which are critical to  home building may be excluded.

Potential occupations which may possibly be excluded include bricklayers, carpenters, ceramic tilers, plasterers, joiners, concreters, roofers, painters, landscapers and plumbers.

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