Australia’s housing affordability crisis is only tightening its grip after the Reserve Bank hiked interest rates this month for the fourth time this year, bringing the cash rate to its highest point since 2011.

And while recent drops in property prices across the country might have provided a glimmer of hope to potential buyers looking to get into the market, experts and consumers agree that supply is the biggest hurdle to overcome.

And while the solution – to build more homes – might seem obvious, the biggest barrier to making that happen is a crisis in itself.

There’s rare consensus across both sides of politics that the simplest path out of the affordability crisis is to build more houses, but a major challenge standing in the way of this is a desperate shortage of people to do the building.

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“Fundamentally, the biggest challenge in housing in Australia is supply,” Commonwealth Bank chief economist Luke Yeaman told news.com.au.

“We have built too few houses in Australia, and that means that you’re always going to see upward pressure on prices… If you don’t solve that, then nothing else will materially solve the problem at the source.”

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Potential buyers agree. According to data from the 2026 Homefront Campaign Research Report, a collaboration between CommBank and Newscorp, 60 per cent of Australians believe that increasing the supply of new homes will improve housing affordability “a fair bit” or “a lot”.

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‘No one on the tools’: The 116,700 tradie black hole

The National Housing Accord, a multi-government and industry agreement designed to address Australia’s structural housing undersupply, has a target of building 1.2 million well-located homes by 2029.

But According to BuildSkills Australia, the Federal Government’s Jobs and Skills Council for the built environment, the nation is staring down a shortfall of the 116,700 construction workers and tradespeople needed above normal levels to get close to the national target.

One of the factors driving this bottleneck is the fact that roughly half of all apprentices walk away before qualifying for a trade.

Master Builders Australia chief executive Denita Wawn warns that everyday Australians are the ones footing the bill for the workforce drought.

“The construction workforce shortage is showing up in building costs and project timelines for Australians looking to build, renovate or buy,” Ms Wawn told news.com.au.

“Australians should call on their local Members of Parliament to act on the nation’s skilled workforce shortage. The sooner we act, the better placed Australia will be to tackle the challenge. The longer action is delayed, the harder and more expensive the solutions will become.”

Master Builders Australia last month released its Future Workforce Blueprint, an analysis combining public data sources to model Australia’s capability to produce more skilled workers, as well as the policy levers and pathways to do so most effectively.

The Blueprint contains 32 policy recommendations, including four priority levers, that Master Builders Australia CEO Denita Wawn says are essential to meeting our housing, infrastructure and economic ambitions.

The four priority policy levers are:

• A Commonwealth payroll tax rebate on apprenticeship wages

• Expansion of Group Training Organisations (GTOs)

• Recognition of Prior Learning (RPL) reform, including activating the 18,400 construction-qualified workers already living in Australia

• A Construction Training Bond to improve apprenticeship completion rates.

“Together, these reforms would reduce the annual workforce shortfall by between 3590 and 5720 workers per year over and above the initial burst of activating 18,400 skilled workers,” Ms Wawn explained.

“The outlook would improve even further if the other recommendations were adopted in full.

“Migration remains an essential part of the solution, but it cannot replace the need to rebuild Australia’s domestic skills pipeline. Equally, attracting apprentices means little if we continue losing over 50 per cent before they complete their training.”

Australians ‘afraid to build’ due to shortages and insolvency fears

This uncertainty around the construction industry’s ability to cope with the volume of work required has resulted in a skittish consumer base with a phobia of new builds.

New research from SEC Newgate with the Growth Distillery revealed that 62 per cent of Australians who refuse to buy off the plan do so out of fear the builder will go bust, while 50 per cent point to endless construction delays.

In addition, the National Housing Affordability Project revealed only 23 per cent of first-home buyers are even willing to look at a newly built home. This leaves the other 77 per cent fighting over the existing property pool, in turn driving national rental vacancy rates down to a grim 1.8 per cent.

“A serious and clear issue for us in the supply space is construction productivity in Australia is very poor,” Mr Yeaman said.

“When you benchmark our construction productivity against peer countries around the world, it is very low. That’s one of the reasons why housing is expensive – because there’s a lot of cost in the system, and it’s also one of the reasons why supply has lagged demand.”

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