Australian Houses Taking Longer to Build

Monday, March 16th, 2015
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A variety of factors are behind a long-term blowout in the time and cost taken to build houses in Australia, a research report says.

In a new report, the Australian Housing and Urban Research Institute (AHURI) says the average time taken to complete construction of a new  home in Australia increased from 4.5 months in 1993 to 7.5 months in 2010.

AHURI says a number of factors are responsible for this, including:

  • Growing complexity of house design, which has led to longer and more complicated schedules (especially in terms of facades) greater customisation and subsequent growth in the total number of contracts. An increase in the number of double storey homes has been a factor as well.
  • The extensive nature of the contract system, which typically sees around 90 to 100 contracts involved in construction for each house and building supervisors typically grappling with 10 to 15 houses in different locations and at different stages of construction at any given time. This complicates the scheduling process, which in turn can lead to scheduling problems and delays in earlier contracts, creating a domino effect down the line.
  • Quality problems leading to building surveyors refusing to certify work, rework, and further inspections and rescheduling of subsequent tasks.

In its report, AHURI says that while prefabrication and modular construction have often been touted as solutions to construction efficiency, current prospects for systematic movement from labour intensive on-site production to capital-intensive off-site production were not great and that the impetus for any form of widespread uptake of manufactured products might be stronger when demand is rising but typically wanes when demand drops back.

Moreover, it said a growing trend toward greater choice was not conducive to the standardised approach of factory production. Even in the case of volume builders, the report said, a typical a new display village could feature up to 50 different homes from multiple builders, and that further, each house design will offer a choice of facade, lists of optional extras and some choice for customisation of the floor plan.

“In sum, there is little standardisation of house design,” AHURI said in its report. “The design approach is characterised by considerable choice of models, choice of options, and provision for purchaser modifications. This approach to house design does not provide the basis for easily moving on-site production off-site into factories.”

While not providing a long list of recommendations, the institute suggests policy makers and the industry look at how the workforce can be better trained to reduce rework and that programs designed to stimulate demand for new housing or create more affordable housing be reviewed and reworked to encourage innovation which could lead to shorter construction time frames.

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The report comes amid growing concern over the cost of housing and the long-term adequacy of housing supply. In a research note published last month, for example, BIS Shrapnel estimated that Australia had a national housing deficit to the tune of around 100,000 and that median house prices have risen from around 250 times the average weekly wage in 1994 to around 425 times the average weekly wage today.

Meanwhile, the Housing Industry Association says that based on middle-range ABS projections regarding income and population growth, the number of houses being built would have to rise from an average of less than 160,000 per year over the past 10 years to around 186,391 per year if the nation is to meet projected needs between now and 2050.

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