Overcoming Construction Constraints for the Supply of New Detached and High-rise Housing

Published by AHURI in June 2026, this research provides the first significant examination of the ability of the Australian construction sector to deliver both detached and high-rise housing. It analysed construction workflows, markets, regulation, workforce, technologies and supply chains.

Researchers conducted 68 interviews with sector participants in Australia and internationally and undertook a thematic analysis of the interview transcripts. Policy testing workshops with industry stakeholders were held, and a comprehensive literature review was conducted. Construction simulation modelling and scenario modelling was also undertaken. All findings were presented to an expert panel, which provided guidance on ways to maximise the policy relevance. This research consists of the final report and three supporting projects.

Key findings on sector issues include – market volatility is the most significant risk that builders face, subcontracting feeds loss of knowledge and lack of skills transfer across the sector, low builders’ margins increase cashflow risk and contribute to poor quality work, and building codes are inadequately reinforced. 

Recommended policy actions

Eight interconnected policy development options have been provided, however researchers have warned that refining and delivering on these policy directions will be challenging. 

1. Develop a national strategy for efficient housing construction. Transforming the housing construction industry to improve productivity requires a focus on the system level, rather than isolated parts of individual subsystems. 
2. Address market volatility. Market volatility is the key barrier to putting housing construction on the path to efficiency. 
3. Modernise the regulatory framework. Inadequate building code enforcement supports inefficiency and risk shifting. Policy makers should harmonise the National Construction Code (NCC) across jurisdictions and ensure compliance.
4. Attract and retain skilled employees. The extensive subcontracting that currently occurs shifts risks down the supply chain. It is recommended that a national construction training board be established to focus on workforce development.
5. Include cost escalation provisions in contracts. Adversarial relationships and unfair contracting arrangements undermine best practice. Embedding fair and transparent cost escalation provisions within Design and Construct contracts will enable better risk sharing, sustainable procurement, and more stable and collaborative practices.
6. Provide greater support for research and development. Government and industry need to provide financial support for R&D to drive productivity and facilitate a transition to net zero.
7. Consider onshoring to reduce supply chain risks. The global supply chain is vulnerable to significant disruptions. Onshoring can reduce sovereign risk and supply chain risk. 
8. Reduce market fragmentation. There is a need to reduce industry fragmentation and grow the size of firms, taking care to avoid excessive market concentration