Confidence in Australia’s home building industry is on the rise, new data shows.

And build times are improving despite remaining above pre-COVID levels.

But the cost and availability of skilled labour remains a concern.

And builders remain concerned that immigration levels are too high and that governments are not doing enough to unlock new housing supply.

At an industry breakfast hosted by Housing Industry Association (HIA) last week, HIA Chief Economist Tim Reardon unveiled the findings of a recent national survey of HIA members. All up, around 1,200 survey responses were received.

A key survey finding was that optimism among the home building industry is on the rise.

All up, 46 percent of survey respondents indicated that they were more optimistic about their business operations compared with at the same time last year.

This outweighed the 29 percent of respondents who felt less optimistic about their operations compared with the same time in 2024.

The survey also found that:

• Labor cost remains the most significant concern for home builders. All up, 64 percent of survey respondents nominated the price of skilled labour as having been a concern for their business operations last year. This is followed by rising insurance costs (57 percent), skilled labour availability (55 percent), material costs (53 percent) and obtaining planning and building approvals (51 percent).
• Construction timeframes have improved but remain above pre-COVID levels. On average, survey respondents indicated that the typical timeframe from new home commencement to completion in detached housing is now 10.4 months. This is down from more than a year (12.2 months) during the peak of the detached housing construction boom in 2022 but remains above pre-COVID levels of 8.3 months in 2019. Across states, reported timeframes range from 7.8 months in Queensland to 13.2 months in Western Australia – the latter of which is currently experiencing busy market conditions and is still using double brick walls (which take longer to erect than timber or steel frames) in a significant portion of new dwellings.
• Approval timeframes remain problematic. Across Australia, respondents indicated that it takes 7.5 months on average to receive both planning and building approval for a new detached home. This consists of 5.4 months for planning approval and 2.1 months to obtain the building approval. Across major states, approval timeframes ranged from 5.7 months in South Australia to 9.5 months in Victoria. Meanwhile, the average cost which is associated with obtaining planning and building approvals (combined) comes in at around $23,000 – with costs lowest in South Australia ($8,216) but highest in Victoria ($29,030).
• Survey respondents feel that building costs are rising (see note). All up, survey participants indicated that the cost of building a new detached home increased by an average of 17.8 percent in 2024. However, this result is contradicted by other data which suggests a much lower rate of escalation in housing construction costs. In the March edition of its Cordell Construction Cost Index, for example, real estate services firm Cotality suggests that detached house construction costs have risen by only 2.9 percent in the year to March 2025.
• Timber frames still rule the roost. According to survey respondents, timber accounts for 80.9 percent of detached dwelling frames followed by steel (11.9 percent) and other (7.2 percent). Across main states, timber framing is particularly common in Victoria (94 percent of detached homes) but accounts for only 56 percent of homes in Western Australia, where solid double-brick homes are still common.
• Immigration levels are too high. More than half (53.3 percent) of respondents indicated that current immigration levels are too high.
• Governments need to do more. Despite recent initiatives on housing supply at both federal and state levels, a perception remains that government action is insufficient to unlock new housing supply. All up, 83.7 percent of survey respondents believe that current government action to unlock new housing supply is not sufficient. Perceptions about government performance in this area are worst in Queensland but most positive in South Australia (which as noted above also has the lowest approval timeframes and costs).

Better times ahead

The latest results come amid expectations that an upturn in new home building activity will gather further momentum.

In its latest forecast released last month, HIA indicated that it expected a sustained increase in new home commencements throughout the second half of this decade.

Leading the charge initially will be the detached house sector, in which commencements are expected to increase from 107,240 in calendar 2024 to reach a peak of 120,910 in calendar 2027.

Stronger activity in this sector is being supported by the peaking of the interest rate cycle (and expectations of further interest rate cuts), persistently low unemployment, a moderation in the rate of construction cost escalation and an undersupply of dwellings.

From 2027 onward, HIA expects activity to remain at elevated levels as a recovery in the multi-unit residential sector (units, townhouses, apartments etc.) begins to kick in.

Activity in the multi-unit sector has been slower to recover compared with its detached house counterpart as higher interest rates and construction costs have created challenges in obtaining project financing.

Over the medium term, however, activity in this sector will be supported by underlying housing shortages, growing interest in build-to-rent projects, planning reforms to unlock housing supply in activity centres and government investment in social and affordable housing.

As a result, HIA expects the number of commencements in this sector to increase from subdued levels of 75,450 in calendar 2026 to more than 100,000 by 2029.

This will offset an easing in detached home building levels from its expected peak in 2027, HIA says.

“Nationally, with high demand and falling interest rates, we will see detached home building pick up over the course of the next two years through to the end of 2027 …” Reardon told the breakfast.

“… From about 2027 is the point at which we see that enormous pent-up demand from apartments starts to kick in.”

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