Australia’s ability to meet its housing targets may depend less on land supply or approvals and more on how efficiently new homes can be built, according to Ray White Chief Economist Nerida Conisbee (pictured).
“The challenge is not in the target itself but in the capacity to achieve it,” Conisbee said, referring to the federal government’s goal of delivering 1.2 million homes over five years.
The warning comes amid signs of renewed building momentum. ABS data shows total dwelling approvals surged 12% in September — the strongest monthly result since June — led by a 26% rise in apartment projects and a 4% lift in detached houses. Despite the rebound, industry leaders say the pace remains well below what’s needed to meet national housing targets.
Conisbee said the target was the right one — it would finally allow Australia to “catch up on the homes we haven’t built since 2007.”
But completions remain well below what’s required.
“Even if demand moderated, we would still need to deliver around 225,000 to 240,000 homes each year to restore balance,” Conisbee said. “Completions currently sit closer to 190,000. The deficit grows every year we miss that mark.”
The Housing Industry Association estimates that meeting the national target would require a 30% increase in skilled trades, not including workers leaving the industry.
“Even with record migration, faster training, and higher participation, that kind of growth is implausible,” Conisbee said.
Master Builders Australia chief economist Shane Garrett echoed the concern, noting that while September’s approvals were the highest in nearly three years, “this still leaves us around 48,000 homes short each year of what’s required under the National Housing Accord.”
“It means the problem isn’t just about policy or approvals — it’s about productivity,” Conisbee said.
Data from the Committee for Economic Development of Australia (CEDA) shows that construction productivity has lagged for decades. Between 1995 and 2024, labour productivity in construction rose just 17%, compared to 64%across the broader market sector.
Each new home still requires dozens of tradespeople working in sequence, with limited gains from one project to the next — a system that Conisbee argues can no longer meet demand.
“The solution to both a lack of labour and low productivity lies in changing how we build,” Conisbee said.
Modern methods of construction (MMC) — such as modular or prefabricated housing — could dramatically improve efficiency by shifting much of the building process off site.
“Walls, floors and entire rooms are manufactured in factories, transported to site and assembled in days," Conisbee said. "It’s faster, cleaner and requires fewer workers on site. The system substitutes labour with precision manufacturing.”
Only about 5% of new homes in Australia use modular methods, compared with 84% in Sweden, 16% in the UK, and 13% in Japan.
“The irony is that our conditions — high wages, labour shortages, and strong housing demand — are exactly those that make modular construction work elsewhere,” Conisbee said, noting that McKinsey has identified Australia’s east coast as one of the world’s most suitable markets for modular housing.
Regional markets stand to gain the most from modular approaches. “Factories located near regional centres can produce homes and building components year-round, delivering them across multiple communities with minimal on-site labour,” Conisbee said.
The federal government’s 2025 budget includes funding to expand modular and prefabrication capacity — a move Conisbee described as “the first national policy acknowledgement that housing targets can’t be met using traditional methods alone.”
Industry leaders agree that faster planning reform and improved productivity will be critical. The Property Council of Australia said approval volumes must exceed 20,000 new homes per month to stay on track with national housing goals, warning that lengthy approval timelines remain a handbrake on supply.
“Automation and robotics are at the centre of that transformation,” Conisbee said.
Companies like Modbotics are using robotic arms and digital design to cut, lift and assemble building modules with millimetre accuracy.
“Tasks that once took crews of tradespeople days can now be done by machines in hours. Each factory worker becomes many times more productive,” Conisbee said. “This shift is not about replacing workers but about using labour more efficiently."
Australia’s housing challenge, she said, is “ultimately one of capacity.”
“Meeting national targets will require faster, more reliable delivery, and that won’t be achieved through traditional, site-based methods alone,” Conisbee said. “Modular and automated construction can increase output without adding proportionate labour or cost.”
“Housing affordability depends on supply, and supply depends on how effectively we can produce new homes. Whether or not a robot builds your next house is less the question; it’s how technology will help make sure it can be built at all.”
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