Productivity key to solving Australia's housing crisis

"ChatGPT can't build houses," economist says

Productivity key to solving Australia's housing crisis


By Mina Martin

As Australia grapples with a housing shortage, industry leaders stressed the critical need for improved productivity in construction, alongside skilled workforce expansion, to meet growing demands, reported.

Productivity lag in construction

During the Urban Development Institute of Australia’s national conference, Luci Ellis (pictured above), Westpac’s chief economist, highlighted the construction sector’s productivity struggle, contrasting with overall economic growth.

“Since 2015, the level of productivity in construction has slightly fallen, while the economy grew by about 2.5%,” Ellis said.

According to Master Builders Australia (MBA), productivity within the construction sector has seen a decline of 6.8% over the five-year period leading up to 2022-23.

Ellis pointed out the diminishing returns of traditional productivity reforms and the necessity for the construction industry to innovate internally.

“We need to improve productivity through program management and actually get more out of the construction industry that we already have,” she said.

The limits of AI in construction

Addressing the hype around generative AI technologies like ChatGPT as a productivity booster for many industries, Ellis was candid about their limitations.

“Customers ask me about AI, but ChatGPT can’t build houses, so a solution has to be found elsewhere.”

Prefab and modular construction

Developers and builders have also been boosting productivity through prefabricated, also known as prefab, and modular construction techniques. This approach involves manufacturing parts of homes in factories before assembling them on-site, leading to faster build times and less waste.

At the UDIA conference, Campbell Hanan, CEO of Mirvac Group, highlighted the significant role of modular construction in enhancing efficiency for apartment complexes and single-family homes alike.

“Digital construction and technology is starting to improve, and we’ve spent a lot of time and focus on it,” Hanan said.

Government support for modular housing

Federal Industry and Science Minister Ed Husic announced efforts to streamline modular housing development, indicating a united front among federal, state, and territory ministers to reduce regulatory barriers and support advanced manufacturing in housing.

“We need to build more quality homes quickly - prefab and modular housing gives us a chance to do that,” Husic said in a statement.  

“With state and territory colleagues we agreed we need to identify red tape that might be holding back the rollout of these types of homes. 

“We need to pull every lever to help use advanced manufacturing to support the rollout of these homes.” 

Addressing the workforce gap

With a pressing need for new entrants in the building and construction industry, MBA CEO Denita Wawn highlighted the importance of addressing skills and workforce shortages.

“The building and construction industry needs around half a million new entrants over the next three to five years to achieve the target of 1.2 million new homes,” Wawn said.

Col Dutton, UDIA national president, stressed the importance of fast-tracking visas for overseas construction workers to mitigate skilled worker shortages.

“The development industry is experiencing major cost increases and delays from skilled worker shortages,” Dutton said, advocating for policies that encourage skilled migration to support the industry’s needs.

Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.

Keep up with the latest news and events

Join our mailing list, it’s free!