As new home building markets improve, Australia’s housing construction trade shortage is starting to deteriorate again, the latest data suggests.

The Housing Industry Association has released the September quarter edition of its HIA Trades Report.

The report provides a quarterly review of the availability of skilled trades and any demand pressures which are evident on thirteen categories of trade which operate in residential building.

Data is measured based on a survey of builders.

All up, the HIA Trades Availability Index deteriorated from a reading of -0.40 in the June quarter to -0.48 in the September quarter.

The index is a measure between +2.00 and -2.00.

Any positive reading on the index represents an oversupply of tradespeople whilst any negative reading indicates a shortfall.

Shortages are evident across all trades except for electrical and are evident across all broad regional and metropolitan markets.

The deterioration in trade shortages breaks a three-year trend of easing shortages which has taken hold since the middle of 2022 (see chart).

As of yet, the deterioration in availability is yet to be reflected in trade prices.

Across all trades, prices contracted by 0.3 percent during the September quarter and are up by relatively modest levels of 2.9 percent over the past twelve months.

This represents the slowest annual rate of increase since the pandemic.

Over the longer term, however, trade prices have increased by more than double the average rate of wage growth since 2019.

 

Growing concern

Driving the increased demand for trades has been a recovery in the market for new home building.

Since bottoming out at 38,147 in the September quarter of 2023, the seasonally adjusted number of new housing commencements has risen during five of the past seven quarters (to June) and reached 45,145 in the June quarter of this year.

Whilst much of the recovery was initially focused on detached home building, the number of commencements in multi-unit residential projects (units, apartments, townhouses etc.) picked up during the first half of this year.

Thus far, much of the recovery has been focused around Queensland, Western Australia and South Australia.

However, there have been more recent signs of life in New South Wales and Victoria.

The latest data reinforces concerns that the cost and availability of skilled trades is likely to reemerge as a constraint upon new housing delivery as the recovery in new home building activity continues to gather momentum.

These concerns are particularly acute given that trade shortages are evident even as the number of new housing starts remains at subdued levels by recent historic standards.

The results further highlight challenges in delivering upon the national housing target of delivering 1.2 million new homes over the five years from 1 July 2024 under the National Housing Accord.

To reach that target, the nation would need to deliver an average of 60,000 new homes per quarter.

As thing stand, however, trade shortages are evident even as the number of commencements stands at barely three quarters of that level.

Whilst pricing pressures remain subdued overall, meanwhile, there are concerns that these may reemerge as the home building recovery gathers further momentum.

Conceriningly, trade prices for site preparation have risen by 8.4 percent over the past year.

Because of the involvement of site preparation workers right at the beginning of projects, there are concerns that this may be a leading indicator of potential price increases for other trades also.

 

Which trades and areas are worst impacted?

Across individual trades, the most significant shortages can be seen in bricklaying (-1.09), ceramic tiling (-0.86), carpentry (-0.74) and roofing (-0.66).

Electrical (+0.02) was the only trade for which no shortage is evident.

Shortages are evident across both metropolitan and regional markets in all five of the nation’s mainland states (Tasmania, the Northern Territory and the Australian Capital Territory are not considered in the report).

The most severe shortages seen in Regional Queensland and Perth. This reflects the strength of home building market conditions in these areas.

However, the trade shortage is beginning to intensify even in the previously more subdued markets of Sydney and Melbourne.

(An interesting point to note is a severe shortage of bricklayers in Perth.

This is due not only to stronger new home building activity but also to a high prevalence of double-brick homes in the Western Australian capital as opposed to brick veneer homes.

Factors which lie behind this include the city’s sandy soil (suitable for double brick foundations), the need for high fire resistance and the existence of a large brick manufacturing industry which drives economies of scale and cost competitiveness for double brick construction.

As a result of this, Perth homes generally require a greater number of bricks and more bricklayers compared with those across other markets.)

 

More workers needed

HIA Senior Economist Tom Devitt says that the availability of skilled workers is shrinking as the new home building market improves.

He called for action to strengthen existing workforce capacity and to attract more skilled tradespeople from overseas (although the latter action also means more immigrants who need to be housed).

“The availability of skilled tradespeople has worsened across Australia as home building pipelines expand again,” Devitt said.

“The HIA Trades Availability Index was measured at -0.48 in the September quarter 2025, a deterioration from the -0.40 reading in the previous quarter,” added Mr Devitt.

“A number of states were already seeing improving home building activity on the back of population growth, tight labour markets, recovering household incomes and relatively more affordable land. With three interest rate cuts in the back pocket, New South Wales and Victoria look to be joining the party.

“With recovering home building pipelines on top of significant volumes of renovations, non-residential and public infrastructure work ongoing across the country, demand for skilled trades will only increase.

“The softening in trades price inflation may also be short lived as a result, with trades prices having already increased by double the broader rate of wage growth across the economy since 2019.

“Without attracting more skilled workers into Australia from overseas, and further developing our existing workforce capacity, the shortage of skilled tradespeople is only expected to worsen.”

 

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