Australia added 205,249 dwelling approvals in 2025–26, the highest annual tally in five years. It sounds like progress. It isn’t. The country needed roughly 500,000 approvals by now to stay on track for the National Housing Accord’s 1.2 million homes by 2028. We’re already more than 100,000 short, and the real constraint isn’t paperwork, it’s people.
The construction industry is facing a workforce shortfall that could reach 300,000 workers by 2027. That’s not a future problem. It’s already baked into timelines, costs and the growing gap between what gets approved and what gets built.
Approvals don’t equal completions
A record 243,864 dwellings were under construction in March 2026, yet apartment projects now take around six months longer to finish than they did before the pandemic. The backlog is real, and it’s growing.
Approvals measure intent. Completions measure housing supply. The gap between the two tells you where the system is breaking. Right now, that gap is widening because the industry can’t staff the projects it’s already approved, let alone the additional volume needed to hit government targets.
To reach 240,000 new homes a year, Australia likely needs at least 250,000 approvals annually, not every approved project gets built. Even with the recent uptick, we’re running well behind that pace.
Which trades are missing
The shortages aren’t uniform. Regional areas and specialist trades are feeling it first. Bricklayers, plasterers, painters, floor layers and tilers are in short supply. These aren’t roles you can automate or import at scale, they require years of training and site experience.
NSW alone needs between 30,000 and 40,000 additional skilled workers to meet its share of the accord. The state is projected to complete 50,000 to 55,000 homes annually. Its target is 70,000 to 80,000.
Competition for labour is heating up. Western Australia and South Australia are running large infrastructure programs. Queensland is preparing for the 2032 Brisbane Olympics. That’s pulling experienced tradespeople away from residential work and making interstate recruitment harder for builders in Sydney and Melbourne.
Another pressure point: higher-paying sectors like disability support are drawing younger workers away from construction altogether. The industry’s retention problem is compounding the recruitment one.
Retention is the bigger issue
Around 9 per cent of construction workers leave the industry every year. Some surveys put annual turnover as high as 21 per cent. Replacing a skilled worker costs businesses between 50 and 200 per cent of that person’s salary. Rework linked to staff turnover adds another 5 to 10 per cent to project costs.
Construction is the only major Australian industry where output per worker has fallen since 1990. That’s a productivity collapse, and it’s tied directly to workforce churn.
The industry’s culture is a key driver. Seventy-hour weeks are considered normal. Flexibility is rare. Parental leave arrangements are poorly managed. Male construction workers die by suicide roughly every second day. Women, who make up just 12.4 per cent of the workforce, leave at even higher rates, around 70 per cent of female apprentices exit within their first year. University of Sydney research found pregnancy was the leading reason experienced women left the sector.
You can’t recruit your way out of a retention crisis. Every attraction campaign is undermined by a workplace culture that pushes people out the door.
What happens if approvals surge
The workforce shortage is manageable now because approvals and financing have been soft. If either picks up sharply, the skills gap will bite hard. Builders won’t be able to staff new projects. Timelines will stretch. Costs will climb.
Recent federal budget tax changes have already contributed to a monthly drop in sales, creating uncertainty that’s slowing residential construction. That delays the workforce crunch, but it also delays housing supply. The longer the market stays subdued, the harder it will be to ramp up when demand returns.
The math is straightforward: if we don’t act now, we’ll face a much sharper supply constraint in three to four years when the backlog of unbuilt approvals meets renewed buyer demand.
The policy blind spot
The National Housing Accord set a target. It didn’t fund the workforce to deliver it. State and federal governments have focused on planning reform, density bonuses and land release. None of that matters if there aren’t enough people to turn dirt.
Apprenticeships are down. Experienced builders are retiring early, citing red tape and project uncertainty. The pipeline is thinning at both ends.
Infrastructure spending is pulling workers away from housing. That’s a policy choice, governments are competing with themselves for the same limited pool of tradespeople.
Key numbers
- 205,249 dwelling approvals in 2025–26 (up 9.2% year-on-year)
- 100,000+ approvals short of the target pace after two years
- 300,000 projected construction workforce shortfall by 2027
- 243,864 dwellings under construction in March 2026 (a record backlog)
- 6 months longer for apartment projects to complete versus pre-pandemic timelines
- 9–21% annual turnover rate in construction workforce
- 30,000–40,000 skilled workers NSW needs to meet its housing share
Scenarios for the next three years
Base case: Approvals stay soft, workforce shortages remain manageable but chronic. Completions undershoot targets by 15–20 per cent. The accord misses its goal by a wide margin, but there’s no acute crisis, just a slow grind of unmet demand and rising costs.
Upside: Government invests in apprenticeships, improves workplace culture and coordinates infrastructure timelines to reduce labour competition. Retention improves marginally. Completions pick up, but we still fall short of 1.2 million homes.
Downside: Approvals surge on lower rates or policy stimulus, but the workforce can’t scale. Projects stall halfway. Costs spike. Builders exit. The backlog grows, and the housing shortage accelerates sharply by 2028–29.
What to watch in the next 12 months
Apprentice commencement and completion rates. If they’re flat or down, the 2027 shortfall will be worse than forecast. Infrastructure project timelines in WA, SA and Queensland, if they’re extended, they’ll lock up skilled workers for longer. NSW and Victorian dwelling completion data versus approvals, the gap between the two will tell you how tight the workforce constraint really is.
Sales volumes and financing activity. If either picks up while the workforce is still constrained, expect timelines and costs to blow out.
Any federal or state funding for construction workforce programs. Without it, the accord is a target with no delivery mechanism.
What this means if you’re buying or holding
If you’re waiting for new supply to cool prices, factor in longer delays. Approvals are up, but completions lag by years, not months. The workforce bottleneck means even approved projects won’t hit the market on schedule.
If you’re holding an established property in an area with strong underlying demand, the supply constraint is working in your favour. New stock will be slower and more expensive to deliver than the market expects.
If you’re considering off-the-plan, ask about the builder’s workforce and subcontractor pipeline. Completion risk is higher now than it was three years ago. A fixed price contract doesn’t help if the project stalls or costs blow out and the builder walks.
Sydney Property Investors Freeze as Tax Shock Hits Prices explores how recent budget changes are already cooling sales, another factor delaying the workforce crunch but also delaying housing supply.
If you’re an investor weighing new versus established stock, the math has shifted. Established properties deliver immediate rental income and avoid construction risk. New builds come with tax benefits but carry timeline and cost uncertainty that wasn’t priced in two years ago.
Start here: if you’re considering new construction, model a six-month delay and a 10 per cent cost overrun into your cashflow assumptions. If the numbers still work, the project might be viable. If they don’t, stick to established stock.
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General info, not financial advice.
