Housing development productivity has halved since the mid-1990s and Australia is now “working more, paying more and delivering less”, according to Altus Group head of development advisory Niall McSweeney.
He said systemic inefficiencies—not construction capability—were driving the shortfall in supply.
McSweeney said the decline was structural, describing a delivery system that has failed to modernise at the scale required.
“Home builders are highly efficient, but fees, charges and approval delays can delay delivery timelines significantly,” he said.
“Capacity exists but it can’t be deployed effectively.”
While material costs have eased globally, Australian delivery costs remain stubbornly high.
McSweeney said domestic inefficiencies had eroded international savings.
“Even if steel or timber falls, a project that runs 50 per cent longer burns the savings through prelims, wages and rework.”
Locally produced, labour-heavy inputs such as concrete, plasterboard and bricks remain inflated because Australia’s approvals cycle moves in stop-start bursts.
“Plants are either idling or overextended, trucking schedules become inefficient and labour is constantly redeployed,” he said.
“Those conditions keep prices high.”
McSweeney pointed to Western Sydney as a case study of a system stuck in neutral despite record demand and approvals.
More than 35,000 approved homes remain unbuilt, with only 5400 under construction against an annual target of 24,000.
“Approvals are being used to enhance land value rather than progress construction,” he said.
“Paper supply inflates while built supply lags.”
Altus data shows prolonged programs are now feeding directly into insolvencies and financing risk.
Build-time blowouts have contributed to a 21 per cent yearly rise in construction failures, while lenders are pricing greater uncertainty into debt.
McSweeney said the chokepoint is not technology or design but the system governing how both are deployed. He said productivity would not lift without aligned incentives around standardisation, program certainty and delivery speed.
“Pattern-book approvals won’t move the dial if procurement still rewards lowest price over time certainty,” he said.
“When regulation enables repeatability, culture prioritises delivery over headline price, and digital integration reduces onsite hours, productivity increases.”
He believes productivity should be treated as a costed line item in feasibility, equal to concrete or steel. Standardised components, bathroom pods and repeatable layouts, he said, could materially reduce labour hours, waste and embodied carbon.
“[But] unit costs won’t fall meaningfully until productivity rises, and that requires a mindset shift,” he said. “When approvals reward standardisation and contracts pay for program certainty, the cost curve will finally bend back toward affordability.”