Construction costs remain big burden facing housing delivery

PROPERTY industry players have sounded the alarm on new housing bottlenecks, calling for a “dramatic shift” in the way Australia delivers homes.

The Federal Government, seeking to address a years-long housing crisis, launched a $47 billion plan in May to rebuild the housing system, including by dramatically boosting supply.

It marked the latest government effort to bolster housing stocks as it works to build 1.2 million new homes by 2029. NSW, Australia’s biggest state, has enacted reforms as part of the pledge, committing to build almost 400,000 homes by decade’s end.

On Thursday, Landcom chief executive Alex Wendler said NSW planning reforms had lifted confidence about getting homes built but conceded challenges remained.

“There’s definitely more confidence,” Wendler told the 2026 Property Council NSW Housing Summit.

On this front, he said many projects were only possible due to state planning reforms which had enabled thousands of dwellings “through rezonings and upzonings”.

“But now new bottlenecks emerge,” he said as part of a Mirvac-sponsored panel discussion.

“So now we are looking at getting enabling infrastructure approvals that are delaying. We can see, as well, that the construction companies are not as strong as we would like.”

Kerry Robinson, a director of Link Wentworth Housing, pointed to problems at the federal level “getting money out the door” for housing.

He said the issue was “being tackled but perhaps not as quickly as the sector might like”.

“If there’s not enduring flow of funds, you can’t expect that the sector has an enduring skill set to be able to respond and use those funds,” he said.

It was about, in Robinson’s view, “thinking through how we move from project funding to streams of funding, which means that the community housing sector can build and retain skills within the organisation”.

Meanwhile, Mirvac executive Stuart Penklis urged the industry to collaborate with government to ensure that we “clearly articulate the challenges we’re facing”.

Penklis said construction costs were at the top of the list, given in the last four or five years, Sydney “had a 40 per cent increase in construction costs in high rise”.

“Sure planning outcomes and the speed up of planning goes a long way to helping some of that but ultimately there needs to be a dramatic shift in the way that we deliver,” he said.

“Modern methods of construction are certainly something that everybody is leaning into at the moment.”