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Regional Economic Development

HIA says wage rise ruling will increase housing costs and hit small builders hardest

THE Housing Industry Association (HIA) has warned the 4.75% rise in minimum award wages will negatively impact the pace of new home builds and small builders will feel its impact the most.

“The Housing Industry Association is deeply concerned with today’s Fair Work Commission decision to increase the Minimum Award Wages by 4.75%, which will make it harder to deliver new homes at the scale Australia urgently needs,” HIA managing director, Jocelyn Martin said.

“The Fair Work Commission’s secondary determination to effectively abolish the C13 classification rate, the entry-level rate for some workers, will also add additional pressure on employers,” she said. “This is a blunt approach that should have been given more detailed consideration. 

“These decisions add yet another layer of cost pressure to a residential building sector already under significant strain arising from the Middle East conflict and the recent Federal Budget, risking further delays and reductions in housing supply.

“Today’s decision will be felt most acutely by small and medium-sized residential builders, who make up the backbone of the industry.

“Small builders operate on tight margins and fixed-price contracts. They simply don’t have the ability to absorb ongoing cost increases.

“Each additional cost impost, whether it’s wages, materials or regulatory burden, chips away at their capacity to keep building,” Ms Martin said.

“This decision will force some builders to rethink new projects, delay commencements, or in some cases exit the market altogether.

“This continued cost escalation across multiple uncoordinated government policy areas, is undermining national efforts to boost housing supply and affordability. You cannot increase costs on one hand and expect output to rise on the other.

“The cumulative impact of labour costs, taxes, planning delays and compliance requirements is creating a structural barrier to delivering new homes and eroding project feasibility,” Ms Martin said.

“Today’s decision will additionally place further flow-on effects for apprentices and workforce development.
“Small builders train the majority of the industry’s apprentices, but rising labour costs make it harder for them to take on and retain trainees.

“At exactly the time we need to grow the workforce to meet housing demand, decisions like this risk pushing us in the opposite direction,” she said.

“HIA recommended a 3.5% increase to the national minimum wage rate this year, with our submission stating this increased rate represents the outer boundary of what is fiscally sustainable in the current environment.

“If governments are serious about improving housing affordability and increasing supply, they must ensure policy settings support builders, not constrain them,” Ms Martin said.

“That includes reducing regulatory costs, supporting apprenticeships, and ensuring that decisions like this from the Fair Work Commission do not undermine broader housing objectives.”

www.hia.com.au

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Building approvals slump as industry braces for tax changes – Master Builders analysis

THE recently-released ABS building approval data for April shows a 3.4% drop in new home building approvals overall. But in a closer look, that average is made up of higher density dwelling approvals falling by 7.2%, but new detached houses only dropped by 0.9%.

“Today’s results confirm that new home building was already on the back foot in the lead up to the May Federal Budget, with approvals falling in both March and April,” Master Builders Australia chief economist Shane Garrett said.

“Independent modelling tells us that the Federal Budget changes including new restrictions on negative gearing and capital gains tax will result in a net decline of 8,700 new homes from the building pipeline over the next four years, exacerbating our shortage of homes,” Mr Garrett said. 

Independent modelling also showed that the Budget would hit construction jobs and GDP while causing rents to increase, according to Mr Garrett.

Master Builders Australia CEO Denita Wawn said a housing crisis was not the time to place more hurdles in front of small builders, who make up 98% of the industry.

“A housing crisis is the time for governments to focus on policies that increase housing supply, including addressing a workforce that is hundreds of thousands short, reducing unnecessary red tape, and improving, not disincentivising, the investment pipeline,” Ms Wawn said.

“Competition regulators must also ensure the surcharges recently introduced by some businesses in response to the Middle East conflict are rolled back as swiftly as they were introduced when conditions allow.

“These pressures are being compounded by broader economic factors, including the impacts of global conflict and higher interest rates. Master Builders is urging policymakers to take into consideration all of these factors, and to ensure that the Budget legislation is an intervention that will increase and not decrease our housing supply,” Ms Wawn said.

In addition to the tax hikes on housing, the Federal Budget also proposes tax changes to trusts. 

“Builders are particularly concerned about the lack of grandfathering provisions in relation to trusts, which creates uncertainty and potential cost implications for long-established business structures,” Ms Wawn said.

“It risks unintended consequences across the building sector, with small businesses using this business structure to manage the inherent risks and volatility in the sector.

“In order to grow the number of builders and housing supply, small businesses require a system that is consistent, predictable, and recognises how they actually operate, and more consultation is needed in this space,” Ms Wawn said.

www.masterbuilders.com.au

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HIA congress warns 'business barriers to construction' must be removed

THE Housing Industry Association’s (HIA) National Policy Congress (NPC) has issued a clear warning that housing supply will continue to suffer unless governments remove barriers to construction and avoid policy settings that undermine investment.

The discussions drew the overall conclusions that housing delivery is under pressure from all sides — rising costs, global uncertainty, workforce shortages and an increasingly complex regulatory environment.

The NPC – made up of elected representatives from regions across Australia, together with the chairs of HIA’s eight specialist committees, staged its annual meeting on the Gold Coast on April 16. 
The industry has come from the summit united in its view that the only sustainable solution to Australia’s housing crisis is to build more homes – and that requires policies that support investment, productivity and confidence.

A range of emerging national policy issues were highlighted at the congress. 

 
International conflict and housing
The NPC reaffirmed its concern that ongoing international conflict continues to pose risks to residential construction activity in Australia. These risks include increased costs of materials, extended construction timeframes and greater uncertainty across housing markets.
With much of the residential building industry operating under fixed‑price contracts, builders — and the trades and product suppliers that rely on them — are exposed when costs increase unexpectedly.
This reinforces the need for all levels of government to avoid introducing policies that would further impede housing delivery, including additional taxation, regulatory burdens or administrative delays.
 
Taxation policy needs work
Members reaffirmed the residential construction industry’s strong opposition to changes to the taxation system that would de-incentivise investment in new housing.
The congress noted that more than 40% of new homes were financed by investors.

Recent independent research indicates that increasing capital gains tax, when applied to establishing housing only, will reduce investment in new home supply. Improving the supply of housing requires more investment in new home supply, not less.
 
Construction Code should be overhauled and modernised

The NPC recognised that Australia has a once-in-a-generation opportunity to reform the National Construction Code (NCC), which is the cornerstone document governing home building.
The NCC has become overly complex and has been tasked to solve an expanding number of policy issues. As a result, it is no longer fit for purpose.

Builders are strongly of the view that the time is right for a complete knock-down rebuild to restore it as a world leading code.
For those states implementing NCC 2025, NPC reaffirmed the position that the industry “needs room to breathe” from any further regulatory changes, and any changes should not occur until at least May 1, 2027.

Equally, any changes to workplace exposure standards for silica should be delayed. Furthermore, new building policy must evolve to keep pace with a range of changes, threats and opportunities.


AI comes into the residential building industry
The NPC recognised that artificial intelligence (AI) has an important role to play in enhancing productivity across the residential building industry.

AI has the potential to improve business operations and workplace practices, deliver on‑site efficiencies, achieve cost savings, and strengthen supply‑chain outcomes through more effective sourcing and use of products and services.
As AI technologies evolve rapidly, governments must strike an appropriate balance between protecting privacy and intellectual property and ensuring that innovation is not unintentionally constrained.

Over‑regulation risks limiting the industry’s ability to adopt new technologies that can help address skills shortages and improve productivity.
 
Values Statement for the residential building industry
The NPC unanimously agreed to adopt a Values Statement for its members and the broader sphere of influence within the residential building industry.
The Values Statement articulates a set of core beliefs and principles intended to guide behaviour and decision‑making, and to inform how the industry operates and engages with stakeholders.

The congress agreed that a clearly defined values framework would be beneficial to industry participants, the community and governments.
The statement is underpinned by eight core principles designed to guide decision‑making, reinforce lawful and acceptable conduct, build trust, strengthen professionalism, promote ethical behaviour, and improve safety and building performance outcomes.
 
Circular economy

The NPC noted the emergence of the circular economy – an environmental concept aimed at maintaining the value of materials for as long as possible across all phases of their life cycle.
The Federal Government’s net zero plan foreshadows increased adoption of circular economy principles, including targets to reduce material footprints, lift materials productivity and increase resource recovery.

The congress affirmed that the industry does not support circular economy principles being imposed as mandatory requirements in the design, manufacture or demolition of buildings. “Any targets must not compromise the primary objectives of the National Construction Code and relevant Australian Standards relating to life safety, nor undermine housing supply or affordability,” a HIA spokesperson said.
“Policies affecting building products must preserve consumer and industry choice in materials and building solutions.

“Frameworks and regulations must recognise competing performance objectives, the high operational energy efficiency of new homes, and regional and geographical considerations that require flexibility in product selection.”

www.hia.com.au

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New home sales maintain momentum, up 17% in March - HIA

NEW HOME sales increased by 17% in March, in spite of the 0.25% rise in the cash rate and increasing fuel prices according to Housing Industry Association (HIA) chief economist Tim Reardon.

The HIA New Home Sales report is a monthly survey of the largest volume home builders in the five largest states and is a leading indicator of future detached home construction.

“Sales of new homes have been increasing since early 2025 and the disruptions of the past two months have not stopped this momentum, with sales for the March quarter 31.9% higher than at the same time last year,” Mr Reardon said.

“This is a strong result given the impact of two rate increases and heightened global uncertainty.

“This likely reflects the strength of the recovery that was underway prior to the increase in rates and the strong growth in established home prices over the past year," he said.  

“The growth in sales could partly reflect a growing involvement from first home buyers who are no longer required to take out mortgage insurance, although this data isn’t available through this data set. A jump in sales in New South Wales and Victoria is a welcome sign given their low volume of detached starts.

“More broadly, demand for housing remains strong, supported by strong population growth and low unemployment. These structural drivers continue to underpin activity, even as borrowing costs rise.

“However, the capacity to respond to this demand remains constrained. The rise in the cost of skilled labour and materials is expected to persist through 2026, while access to shovel ready land remains the key limit the number of homes that can be delivered,” Mr Reardon said.

“Input costs are also emerging as a renewed risk. More significant is the risk that higher energy costs feed into the production of materials such as steel, bricks and concrete, which would place further upward pressure on construction costs later in 2026.”

By state, Queensland recorded the largest monthly increase in March, with a 34.3% rise.

This was followed by South Australia (+22.5%), Victoria (+19.1%) and New South Wales (+11.8%) with Western Australia the only state to see a decline in new home sales contracts (-0.3%).

www.hia.com.au

 

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HIA says home building to lift in 2026 – but interest rates determine how far and how fast

AUSTRALIA’s home building industry is expected to strengthen through 2026, supported by gradually improving building approval levels and a recovery in demand, but the pace of growth will depend on how quickly interest rates can fall, according to the Housing Industry Association (HIA).

HIA senior economist Tom Devitt said new data on building approvals and inflation, released today, provides an important signal for the housing market as it enters 2026.

“Building approvals are the clearest leading indicator of future home building, and they have been gradually rising over the past year as the cash rate fell,” Mr Devitt said. 

“Building approvals data shows activity has been strengthening over the last couple of years, including a 10.1% increase in house approvals in the last three months compared to the same quarter two years earlier, and a 36.4% increase in multi-unit approvals over the same period. 

“We expect approvals to continue trending upward, which should translate into higher levels of home building activity through 2026, particularly once the impact of earlier rate cuts flows through to construction starts.

“It is anticipated that a recovery will continue in both detached housing and multi-unit construction from 2026 onward, following several years of subdued activity, especially in the apartment sector,” Mr Devitt said.

“After nearly a decade of underbuilding, the foundations are finally being laid for a broader housing recovery in 2026.

“Strong population growth, rising established home prices and an improving approvals pipeline are all pointing toward higher levels of home building over the next few years.

“While the price of land and taxes on housing are the key determinants of the number of homes to be built this year, inflation also remains a risk to a faster recovery in home building,” he said.

“The trimmed mean consumer price index for November came in at an annual rate of 3.2%, indicating that further rate cuts will be delayed.

“A few recent surprises to electricity and rental prices lifted the annual rate of inflation above the RBA’s 2-3% target.

“Property rates have also been accelerating, with each of the last five annual increases larger than the last, increasing by a further 6.2% in 2025.

“There have also been recent pressures in other items like water and sewerage utilities and government excise taxes,” Mr Devitt said.

“Price pressures have eased from their peak and many of the recent upward surprises are driven by temporary factors, like the timing of electricity rebates or domestic holiday activities.

“Nonetheless, CPI inflation is likely to remain elevated in the near term and the RBA is on the lookout for any signs of underlying inflation being reignited.

“The rate cuts delivered in 2025 provided an important tailwind for housing demand and approvals. But without further easing in borrowing costs, the recovery in home building will be more gradual than Australia needs, given the scale of the housing shortfall.”

According to HIA estimates, Australia remains short of its housing needs by close to two million homes, with population growth continuing to outpace new supply.

“This is the central challenge facing the housing market in 2026,” Mr Devitt said.

“A constrained supply of new homes is adding to upward pressure on rents, prices and inflation itself, which in turn feeds back into higher interest rates.”

“It is particularly counterproductive that the shortage of housing supply is putting pressure on inflation and interest rates, further impeding new home building.”

HIA’s outlook shows detached home building strengthening across most states in 2026, led by Queensland, South Australia and Western Australia, with New South Wales and Victoria beginning to recover after lagging earlier in the cycle.

The multi-unit sector is also expected to turn a corner from 2026, as higher established unit prices improve project feasibility and a large pipeline of approved but not commenced projects begins to move. 

“The next housing upswing is taking shape, but it will not reach its full potential unless policy settings support it,” Mr Devitt said.

“Lowering the cost of delivering new homes through planning reform, improved land supply and lower government charges will be critical if Australia is to lift housing supply without reigniting inflation,” he said.

In seasonally adjusted terms, the volume of new home approvals in the three months to November compared with the same quarter two years earlier increased the most in Western Australia, up by 71.3%.

This was followed by Queensland (+33.6%), South Australia (+29.2%), New South Wales (+24.6%), Victoria (+3.7%) and Tasmania (+0.5%). In original terms, the Northern Territory increased by 68.1% while the Australian Capital Territory declined by 47.5%.

www.hia.com.au

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HIA says policy changes seeing a spike in home building

THE Housing Industry Association (HIA) is observing a spike in new home building that seems to be a result of recent policy changes in several areas both financial and governmental.

“Sales of new homes for construction jumped 25.9% in September following a series of policy changes, including a cut to the cash rate in August, removal of Lenders Mortgage Insurance and easing in planning restrictions,” HIA chief economist, Tim Reardon said.

The HIA New Home Sales report is a monthly survey of the largest volume home builders in the five largest states and is a leading indicator of future detached home construction.

“The volume of new homes sold nationally increased by 25.9% in the month of September 2025. This is the largest monthly increase since the final phase of the HomeBuilder grant in March 2021,” Mr Reardon said.

“This sees sales in the September quarter a more modest 4% higher, to reach its highest quarterly volumes since October 2022.

“Sales of new homes in September were notably stronger in New South Wales and Victoria where sales have previously struggled to recover despite the cut to the cash rate. These markets have been very slow to respond to the cuts to the cash rate. 

“The rise in sales in New South Wales and Victoria could be a sign that new home building is returning to more average levels, but further data will be necessary to support this view,” Mr Reardon said.

“The cut to the cash rate is the primary driver of the rise in sales of new home this year. Other factors include low unemployment, strong population growth and rising established home prices.

“The rise in established home prices is seeing more households choosing to build a new home, because it is cheaper than an established home.

“The removal of the requirement for LMI for first home buyers has seen builders across the country report increased first home buyer activity.” He said.

“Lowering the cost of borrowing is expected to see an increase in new home building, and therefore have a positive impact on the supply of homes. Because this policy change doesn’t impact the amount a first home buyer can borrow, it doesn’t add to their risk of default.

“Around a third of all new homes are built by first home buyers and they play an important role in increasing housing supply.

“The announcement is likely to have seen more confidence in the market outlook for all households, not just first home buyers.

“Additional policy reforms including accelerated approvals processes in New South Wales through complying development pathways (CDCs) and lower infrastructure costs appear to be having a positive impact on supply.

“Further reforms to fast-track approvals as well as accelerated Environment Protection and Biodiversity Conservation (EPBC) decisions and further planning reforms could further increase supply.

“Australia will likely fall well short of the goal of 1.2 million new homes, but policy levers are starting to move in the right direction in many states,” Mr Reardon said.

This month’s increase in new home sales nationally was driven by all states, led by a 34.8% increase in Victoria.

New South Wales trailed closely behind with a 34.4% monthly increase, followed by Queensland (+25%), Western Australia (+14.2%) and South Australia (+7.5%).

www.hia.com.au

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New home sales remain around three-year high - HIA

NEW HOME sales in Australia are still peaking at their three-year highs.

“The volume of new homes sold (contract-to-build) nationally decreased by 1.2% in the month of August 2025,” HIA senior economist, Tom Devitt said.

The Housing Industry Association (HIA) New Home Sales report is a monthly survey of the largest volume home builders in the five largest states and is a leading indicator of future detached home construction.

“New home sales in the three months to August 2025 were 5.1% higher compared to the previous quarter,” Mr Devitt said.

“Despite the slight monthly moderation, sales in the three months to August 2025 remain higher than any previous quarter in the last three years. 

“This indicates that cuts to the cash rate are leading to a return in home buying activity, albeit very slowly.

“Demand for housing continues to increase due to elevated population growth and sustained low levels of unemployment.

“These factors have contributed to an increase in home buying activity, leading to an increase in the price of established homes,” Mr Devitt said.

“Ongoing competition for a limited stock of established homes available for purchase has seen buyers moving into new home building as an alternative.

“The supply side stimulus resulting from the Australian Government’s decision to remove the requirement for mandatory Lenders’ Mortgage Insurance (LMI) for first home buyers, will also boost new home sales.

“Around a third of all new homes are built by first home buyers and they play an important role in increasing housing supply.

“Reducing the barriers to entry for first home buyers will lead to an increase in housing supply, putting downward pressure on prices beyond the short term and increasing rates of homeownership,” Mr Devitt said.

This month’s decrease in new home sales nationally was driven by declines across all states except Victoria, where sales increased by 7.1%. The monthly declines were led by Western Australia, with sales decreasing by 7.7%, followed by Queensland (-6.7%), South Australia (-6.0%) and New South Wales (-1.2%).

www.hia.com.au

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