July 14, 2025 • 12 mins
Advice leaked from Treasury yesterday shows that the federal government's goal of 1.2 million homes over the next five years is unlikely to be achieved.
Jocelyn Martin, Managing Director of the Housing Industry Association (HIA) talks to Sean about where the construction sector is up to, and what it needs from government, banks and others.
Find out more: https://fearandgreed.com.au
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to the Fear and Greed Daily Interview. I'm sure, Ailmer.
The construction sector in Australia, particularly residential construction, not just
provides houses for millions of Australians, but also provides tens
of thousands of jobs for both skilled and low skilled workers,
as well as providing significantly to economic growth. But for
the past couple of years, all we seem to hear
(00:26):
about it is that there aren't enough homes being built.
On top of that, vice leaked from Treasury yesterday shows
that the Federal government's goal of one point two million
homes over the next five years is unlikely to be achieved.
To help me understand where the sect is up to
in what it needs from government and others, I welcome
Jocelyn Martin, Managing Director of HIA. Jocelin, Welcome to Fear
(00:47):
and Greed.
Speaker 2 (00:48):
Thanks Sean.
Speaker 1 (00:49):
It's just every year. I think the first of July
was the anniversary from when the government committed to build
one point two million homes under the National Housing Accord.
What's happened since?
Speaker 2 (00:59):
Well, I mean, simple mass is two hundred and fifty
thousand homes a year and we're well short of that.
I think in the last twelve months we've built just
under one hundred and seventy thousand homes, so we're not
on track to build one point two million homes at all,
and obviously every year we don't do that increases the
target for the years to come. So you know what
(01:23):
has happened since, well, essentially nothing. We're still working on
improvements to barriers, to housing supply, skills, shortages, you name it.
Those barriers still exist, so we were a lot of
work to do if we're actually are going to even
come close.
Speaker 1 (01:43):
Okay, I want to go through some of those issues
because we kind of bandy them around without maybe understanding them.
Let's start with land supply, and given with such a
big nation, is the problem that the land supply and
the places people want to live. There's not much there
and probably too much outside that. What is the land
(02:04):
to place you.
Speaker 2 (02:06):
Well, I think many of our builders will say that
that's actually the heart of the issue, is available land.
It takes a long time for greenfield land to come online.
The approval process is very lengthy. The delivery of the infrastructure,
the sewer, the water, the power that is needed to
put homes there is actually fraught with a range of
(02:29):
different approvals. You're relying heavily on organizations such as Sydney
Water to actually deliver that infrastructure in a timely way,
and so you know, a lot of the problems start
with the availability of land and the speed at which
that land can come to market.
Speaker 1 (02:48):
Are we being reasonable when we complain about it?
Speaker 2 (02:50):
Like?
Speaker 1 (02:50):
Is it of inefficient? You mentioned Sydney Water, but all
cities have the same infrastructure requirements. Is it just hard
to do or some places better than others when it
comes to electricity, gas, water, etc.
Speaker 2 (03:05):
Yeah? Look, I don't think it's easy to do, but
I think it actually could be much much more streamlined.
I mean, at the moment, a lot of the approvals
are kind of sequential. So you know, for instance, you
can apply for an address if you like on a subdivision,
you have to wait for that land to be ready
(03:26):
to do that. You could actually put in a DA
and concurrently with the land being developed, which would already
speed things up. So are there any states doing better
than others? Look? Overall, I think South Australia has actually
managed to make some improvements to their planning system in
order to bring land online much quicker. But certainly in
(03:49):
areas such as New South Wales and Victoria, very little
improvement at this stage.
Speaker 1 (03:54):
What about local planning rules and building codes? Everyone complains
about those as well. Are they still a major issue?
Speaker 2 (04:00):
Well, there was a very significant release of the National
Construction Code. It was NCC twenty twenty two, although I
think it really hasn't been released in a couple of
states like South Australia have put a freeze on it
for instance, But it was a significant release that included
a lot of measures around climate and also around accessibility,
(04:23):
and so I think that that was definitely a huge
impost on the industry. It actually was a very it's
a very complicated document now it is actually very hard
for a lot of builders to actually know whether they're
doing the right thing, and it has added a lot
of complexity to the building process and it's also probably
reduced the amount of consumer choice it's available too. So
(04:47):
for instance, things that you can't build on particular blocks,
you know, with certain orientations, you know, you can't have
the sized home that you necessarily want, or the layout
of the bathroom exactly how you would like it because
of those changes. And so our reckoning is that it's
probably added up to thirty or forty thousand to the
(05:08):
cost of a new home through those changes to the NCC.
The other issue, I guess is that, you know, it
is part of the red tape and the compliance that
the builder has to make, and there's a lot of
stakeholders that are influencing the National Construction Code, and I
think in some ways it's lost its way. It's actually
(05:29):
no longer a bible for how to build a home.
It's actually the answer to climate change, the answer to
answer to accessibility, the answer to insurance, and it's trying
to be all things to all people. And I think
that it's meant that it's ended up being much much
more complex, and indeed many of the things that are
coming in with it are actually now you know, diminishing.
(05:52):
There's diminishing returns to a lot of those changes. Now
it's just not financially viable to introduce those changes.
Speaker 1 (06:00):
Stay with me, Jocelin, we'll be back in a minute.
I'm speaking to Jocelyn Martin, managing director of HIA. Before
the break, we were talking about more about red tape,
What about things like skills shortages? Is it still an
issue in Australia.
Speaker 2 (06:20):
So if we were to build the one point two
million homes that is the target that the government have said,
and indeed there's probably the amount of homes that we
need before we actually impact affordability. Our estimation is that
we need about eighty three thousand people right now additional
to what we have in the industry, and that's across
all trades, mainly carpenters, brick layers, electricians and plumbers, but
(06:42):
still across all trades and in all states. So it's
at the moment where they're not building enough homes, say
in Victoria, for instance, we are seeing our volume builders
sort of meet the needs of the current climate and
so they're actually reducing their need for trades. So if
(07:03):
you looked at it now, it wouldn't look like we
had a skill shortage in some areas, but in actual fact,
if we were to actually be building it the volume
that we need, we would be, you know, way short
of our skilled labor. And as we saw during COVID,
that caused delays because there just wasn't that available available trades,
and that increased costs for people too.
Speaker 1 (07:25):
What about the cost of delivering a new home? So
we talk about productivity, and the government is big on productivity.
I'm sure cutting red tape would improve productivity, but is
there a role for the industry itself to be more
productive in how it builds homes.
Speaker 2 (07:41):
Yeah, so the government of obviously come back to this
term talking about productivity as the productivity is a new buzzword, definitely,
and I think if you in talking to the Housing
Minister Clara O'Neil, she would say that productivity in our
sector obviously is related to the barriers planning and and
the construction code, but also, you know, having not enough
(08:05):
skilled labor, but also the fact that the industry doesn't
necessarily doesn't typically innovate as much as maybe it could.
I probably challenged that thinking, you know, there's a lot
of talk around the fact that we still build the
same way we have for sixty sixty years ago, whereas
(08:25):
I see a lot of improvements in the way that
we build our homes and the speed at which they
can bring them to market, and a lot of the
innovation has also happened at the design end as well,
and so I think that the industry still has a
lot of work to do in that area to be
more innovative. And to drive innovation. But I also think
(08:45):
that if an industry itself is not as profitable as
it could be, you're unlikely to get that reinvestment that
you need. I also think that the industry probably has
to be a better employer, particularly in terms of attracting women.
I mean, if we actually own employ fifty percent of
the available work or attrack fifty percent of the available workforce,
(09:06):
then we're actually always going to have a skill shortage.
And you know, it is a challenge because we compete
with industries that can offer working from home options, more
flexible work in terms of childcare and so forth, and
we've got to be alive to that and actually offer,
you know, try and figure out what our value proposition
to a female workforce is. And I think that's on
(09:27):
us too, as much as it is on the government
to kind of do promotional programs and so forth. I
think the industry itself has to kind of think how
it can actually improve itself as an employer for women
in the industry.
Speaker 1 (09:43):
The other party in all this outside the industry and government,
of course, is the financier is the banks. And I
mean I have build a friends who are always complaining
that banks won't actually allow them to take out an
overdraft to fund the building they're doing. Is it getting
any better? I mean, I know some of the rules
are set by the regulator APRA, and it does make
it difficult for the banks, and I don't want a
(10:04):
bank bash here, but are the banks playing their role
looking after builders?
Speaker 2 (10:10):
Look? I think that it is interesting to me that
a builder, when you think about it, underwrites the whole
entire project from start to finish, and the buck stops
with them essentially. So when we see situations like COVID
where build times extended, it became very very obvious who
was holding the biggest risk, and things like progress payments
(10:32):
and the speed at which progress payments. At the moment,
I think that model is still very very old fashioned.
It requires a lot of manual checking and a lot
of delays, quite frankly by the bank in terms of
providing that cash flow. Whereas the builder, on the other hand,
has seen the suppliers shorten their terms, so they're actually
now trying to meet shorter terms from their suppliers, but
(10:53):
at the same time still having that cash flow. The
pace of that cash flow go according to how it
has been for a long long time, So I think
the banks probably have a role to play in kind
of thinking about how they could modernize that that side
of things and adjust to kind of have some sort
of better flow, because I do think the builders are
(11:16):
holding the entire risk, and that became very obvious during
COVID the second that everything took a lot longer. It
was the builder that was actually the only one that
was exposed during that process. And I mean the consumer
ultimately obviously because they were left with a half built
home in some cases, but you know, it was basically
(11:36):
the entire risk through that process was on the builder.
I also think that in terms of assessing, you know,
mortgage capacity, the banks have got the very comfortable three
percent buffer. That means that first home buyers, of course
are being assessed on at a much higher rate than
what they actually may ever need to meet or at
(11:58):
least in the short term, and I think that reassessing
that buffer would be something that I think the banks
should probably consider as well.
Speaker 1 (12:06):
Justin thank you for talking to Fear and Greed.
Speaker 2 (12:08):
No problem. Thanks.
Speaker 1 (12:09):
That was Justin Martin, managing director of HIA. This is
the Fear and Greed Business Interview. Join us every morning
for the full episode of Fear and Greed. Daily business
news for people who make their own decisions. I'm Sean.
I ALM enjoy your day.
Welcome to the Fear and Greed Daily Interview. I'm sure, Ailmer.
The construction sector in Australia, particularly residential construction, not just
provides houses for millions of Australians, but also provides tens
of thousands of jobs for both skilled and low skilled workers,
as well as providing significantly to economic growth. But for
the past couple of years, all we seem to hear
(00:26):
about it is that there aren't enough homes being built.
On top of that, vice leaked from Treasury yesterday shows
that the Federal government's goal of one point two million
homes over the next five years is unlikely to be achieved.
To help me understand where the sect is up to
in what it needs from government and others, I welcome
Jocelyn Martin, Managing Director of HIA. Jocelin, Welcome to Fear
(00:47):
and Greed.
Speaker 2 (00:48):
Thanks Sean.
Speaker 1 (00:49):
It's just every year. I think the first of July
was the anniversary from when the government committed to build
one point two million homes under the National Housing Accord.
What's happened since?
Speaker 2 (00:59):
Well, I mean, simple mass is two hundred and fifty
thousand homes a year and we're well short of that.
I think in the last twelve months we've built just
under one hundred and seventy thousand homes, so we're not
on track to build one point two million homes at all,
and obviously every year we don't do that increases the
target for the years to come. So you know what
(01:23):
has happened since, well, essentially nothing. We're still working on
improvements to barriers, to housing supply, skills, shortages, you name it.
Those barriers still exist, so we were a lot of
work to do if we're actually are going to even
come close.
Speaker 1 (01:43):
Okay, I want to go through some of those issues
because we kind of bandy them around without maybe understanding them.
Let's start with land supply, and given with such a
big nation, is the problem that the land supply and
the places people want to live. There's not much there
and probably too much outside that. What is the land
(02:04):
to place you.
Speaker 2 (02:06):
Well, I think many of our builders will say that
that's actually the heart of the issue, is available land.
It takes a long time for greenfield land to come online.
The approval process is very lengthy. The delivery of the infrastructure,
the sewer, the water, the power that is needed to
put homes there is actually fraught with a range of
(02:29):
different approvals. You're relying heavily on organizations such as Sydney
Water to actually deliver that infrastructure in a timely way,
and so you know, a lot of the problems start
with the availability of land and the speed at which
that land can come to market.
Speaker 1 (02:48):
Are we being reasonable when we complain about it?
Speaker 2 (02:50):
Like?
Speaker 1 (02:50):
Is it of inefficient? You mentioned Sydney Water, but all
cities have the same infrastructure requirements. Is it just hard
to do or some places better than others when it
comes to electricity, gas, water, etc.
Speaker 2 (03:05):
Yeah? Look, I don't think it's easy to do, but
I think it actually could be much much more streamlined.
I mean, at the moment, a lot of the approvals
are kind of sequential. So you know, for instance, you
can apply for an address if you like on a subdivision,
you have to wait for that land to be ready
(03:26):
to do that. You could actually put in a DA
and concurrently with the land being developed, which would already
speed things up. So are there any states doing better
than others? Look? Overall, I think South Australia has actually
managed to make some improvements to their planning system in
order to bring land online much quicker. But certainly in
(03:49):
areas such as New South Wales and Victoria, very little
improvement at this stage.
Speaker 1 (03:54):
What about local planning rules and building codes? Everyone complains
about those as well. Are they still a major issue?
Speaker 2 (04:00):
Well, there was a very significant release of the National
Construction Code. It was NCC twenty twenty two, although I
think it really hasn't been released in a couple of
states like South Australia have put a freeze on it
for instance, But it was a significant release that included
a lot of measures around climate and also around accessibility,
(04:23):
and so I think that that was definitely a huge
impost on the industry. It actually was a very it's
a very complicated document now it is actually very hard
for a lot of builders to actually know whether they're
doing the right thing, and it has added a lot
of complexity to the building process and it's also probably
reduced the amount of consumer choice it's available too. So
(04:47):
for instance, things that you can't build on particular blocks,
you know, with certain orientations, you know, you can't have
the sized home that you necessarily want, or the layout
of the bathroom exactly how you would like it because
of those changes. And so our reckoning is that it's
probably added up to thirty or forty thousand to the
(05:08):
cost of a new home through those changes to the NCC.
The other issue, I guess is that, you know, it
is part of the red tape and the compliance that
the builder has to make, and there's a lot of
stakeholders that are influencing the National Construction Code, and I
think in some ways it's lost its way. It's actually
(05:29):
no longer a bible for how to build a home.
It's actually the answer to climate change, the answer to
answer to accessibility, the answer to insurance, and it's trying
to be all things to all people. And I think
that it's meant that it's ended up being much much
more complex, and indeed many of the things that are
coming in with it are actually now you know, diminishing.
(05:52):
There's diminishing returns to a lot of those changes. Now
it's just not financially viable to introduce those changes.
Speaker 1 (06:00):
Stay with me, Jocelin, we'll be back in a minute.
I'm speaking to Jocelyn Martin, managing director of HIA. Before
the break, we were talking about more about red tape,
What about things like skills shortages? Is it still an
issue in Australia.
Speaker 2 (06:20):
So if we were to build the one point two
million homes that is the target that the government have said,
and indeed there's probably the amount of homes that we
need before we actually impact affordability. Our estimation is that
we need about eighty three thousand people right now additional
to what we have in the industry, and that's across
all trades, mainly carpenters, brick layers, electricians and plumbers, but
(06:42):
still across all trades and in all states. So it's
at the moment where they're not building enough homes, say
in Victoria, for instance, we are seeing our volume builders
sort of meet the needs of the current climate and
so they're actually reducing their need for trades. So if
(07:03):
you looked at it now, it wouldn't look like we
had a skill shortage in some areas, but in actual fact,
if we were to actually be building it the volume
that we need, we would be, you know, way short
of our skilled labor. And as we saw during COVID,
that caused delays because there just wasn't that available available trades,
and that increased costs for people too.
Speaker 1 (07:25):
What about the cost of delivering a new home? So
we talk about productivity, and the government is big on productivity.
I'm sure cutting red tape would improve productivity, but is
there a role for the industry itself to be more
productive in how it builds homes.
Speaker 2 (07:41):
Yeah, so the government of obviously come back to this
term talking about productivity as the productivity is a new buzzword, definitely,
and I think if you in talking to the Housing
Minister Clara O'Neil, she would say that productivity in our
sector obviously is related to the barriers planning and and
the construction code, but also, you know, having not enough
(08:05):
skilled labor, but also the fact that the industry doesn't
necessarily doesn't typically innovate as much as maybe it could.
I probably challenged that thinking, you know, there's a lot
of talk around the fact that we still build the
same way we have for sixty sixty years ago, whereas
(08:25):
I see a lot of improvements in the way that
we build our homes and the speed at which they
can bring them to market, and a lot of the
innovation has also happened at the design end as well,
and so I think that the industry still has a
lot of work to do in that area to be
more innovative. And to drive innovation. But I also think
(08:45):
that if an industry itself is not as profitable as
it could be, you're unlikely to get that reinvestment that
you need. I also think that the industry probably has
to be a better employer, particularly in terms of attracting women.
I mean, if we actually own employ fifty percent of
the available work or attrack fifty percent of the available workforce,
(09:06):
then we're actually always going to have a skill shortage.
And you know, it is a challenge because we compete
with industries that can offer working from home options, more
flexible work in terms of childcare and so forth, and
we've got to be alive to that and actually offer,
you know, try and figure out what our value proposition
to a female workforce is. And I think that's on
(09:27):
us too, as much as it is on the government
to kind of do promotional programs and so forth. I
think the industry itself has to kind of think how
it can actually improve itself as an employer for women
in the industry.
Speaker 1 (09:43):
The other party in all this outside the industry and government,
of course, is the financier is the banks. And I
mean I have build a friends who are always complaining
that banks won't actually allow them to take out an
overdraft to fund the building they're doing. Is it getting
any better? I mean, I know some of the rules
are set by the regulator APRA, and it does make
it difficult for the banks, and I don't want a
(10:04):
bank bash here, but are the banks playing their role
looking after builders?
Speaker 2 (10:10):
Look? I think that it is interesting to me that
a builder, when you think about it, underwrites the whole
entire project from start to finish, and the buck stops
with them essentially. So when we see situations like COVID
where build times extended, it became very very obvious who
was holding the biggest risk, and things like progress payments
(10:32):
and the speed at which progress payments. At the moment,
I think that model is still very very old fashioned.
It requires a lot of manual checking and a lot
of delays, quite frankly by the bank in terms of
providing that cash flow. Whereas the builder, on the other hand,
has seen the suppliers shorten their terms, so they're actually
now trying to meet shorter terms from their suppliers, but
(10:53):
at the same time still having that cash flow. The
pace of that cash flow go according to how it
has been for a long long time, So I think
the banks probably have a role to play in kind
of thinking about how they could modernize that that side
of things and adjust to kind of have some sort
of better flow, because I do think the builders are
(11:16):
holding the entire risk, and that became very obvious during
COVID the second that everything took a lot longer. It
was the builder that was actually the only one that
was exposed during that process. And I mean the consumer
ultimately obviously because they were left with a half built
home in some cases, but you know, it was basically
(11:36):
the entire risk through that process was on the builder.
I also think that in terms of assessing, you know,
mortgage capacity, the banks have got the very comfortable three
percent buffer. That means that first home buyers, of course
are being assessed on at a much higher rate than
what they actually may ever need to meet or at
(11:58):
least in the short term, and I think that reassessing
that buffer would be something that I think the banks
should probably consider as well.
Speaker 1 (12:06):
Justin thank you for talking to Fear and Greed.
Speaker 2 (12:08):
No problem. Thanks.
Speaker 1 (12:09):
That was Justin Martin, managing director of HIA. This is
the Fear and Greed Business Interview. Join us every morning
for the full episode of Fear and Greed. Daily business
news for people who make their own decisions. I'm Sean.
I ALM enjoy your day.
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