What small builders are saying about the housing supply challenge in Australia – realestate.com.au

Small builders say pressure is mounting across the sector, from planning delays to staff shortages.

Under the National Housing Accord, Australia aims to build 1.2 million new homes by mid-2029, a target that relies heavily on the ability of builders – many of whom are small businesses – to increase production.

According to the Housing Industry Association (HIA) Small Business Condition Report 2026, the combined impact of planning delays, staff shortages and rising regulatory costs poses an immediate risk to the delivery of new homes unless governments at all levels intervene.

Surveying HIA members from all parts of the construction industry who identify as small businesses, the report measured sentiment across the sector and assessed how the residential construction sector could perform from 2026.

HIA director Jocelyn Martin said the report “paints a clear picture” of a sector under pressure despite strong demand for new homes.

“Small construction companies are the engine room of Australia’s residential construction industry, but they are being asked to do more with less – facing rising insurance premiums, growing compliance obligations and planning delays that are putting pressure on cash flow and undermining confidence,” Ms Martin said.

These pressures are already influencing business decisions across the industry.

According to the results, 68% of respondents said they had considered scaling back or closing their business due to red tape and compliance burdens, while almost three-quarters do not expect to hire additional staff in the coming year.

Scheduling delays were identified as a major barrier to productivity.

The research found that 88% of small builders face approval times of more than eight weeks, while one in three experienced delays of more than six months.

“For small businesses, time is money and lengthy approval processes mean higher holding costs, delayed starts and greater financial risk, reducing the number of homes that can be delivered,” Martin said.

At the same time, workforce constraints are exacerbating these challenges, with 67% of small construction companies reporting difficulty recruiting or retaining workers.

The results showed that 88% of small builders face approval times of more than eight weeks. Photo: Getty

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Other findings show that 63% of respondents say the changes introduced under the National Construction Code (NCC) 2025 had a moderate or major impact on their business, adding to the pressure on already heavy operations.

The NCC sets minimum standards for new buildings, covering topics such as design, safety and sustainability, and is typically updated every three years.

In response to industry concerns about costs, complexity and delays, the Federal Government announced in August 2025 that it would freeze further updates to the NCC until the end of the National Housing Agreement.

The pause is intended to provide builders with greater legal certainty, help speed construction and reduce the risk of additional compliance costs or redesigns that could delay projects.

“Streamlining planning systems, reducing compliance burdens and providing greater regulatory certainty would immediately improve productivity in the small business sector,” Martin said.

“Targeted support for apprentices, skills pathways and technology adoption would help small builders expand their workforce and increase production.

“With the right policy settings, small construction companies will play a central role in delivering more homes faster, but without reforms housing supply will continue to fall short.”

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