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Wednesday, December 8, 2021

Building more homes quickly is harder than it sounds. Australia hasn’t done this for decades

With HomeBuilder and skyrocketing house prices, homebuilding is enjoying the hottest year in history.

Over the year, the number of houses under construction (not apartments) jumped from 56,060 in the June quarter of 2020 to 88,445 in the June quarter of 2021 – the highest peak ever.

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Houses under construction

Australian Bureau of Statistics

It would be quite reasonable to expect the number of the record under construction to be converted to completed records. This is the meaning of construction.

But, oddly enough, the same set of figures from the Statistical Office shows nothing of the kind. Even after the huge leap in construction and all the previous leaps in construction, the number of houses built per quarter has changed little.

In the June quarter of this year, it stood at 28,399, slightly more than the quarterly amount for any period of the past five decades.

It’s like starting construction is one thing and finishing another.

Houses under construction, houses under construction, quarterly

Building more homes quickly is harder than it sounds. Australia hasn't done this for decades

Australian Bureau of Statistics

88,445 or more homes currently under construction will be completed, but it will take longer than usual.

Our research shows that every time the number of houses under construction reaches a peak, construction completion times are sharply reduced.

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During the small construction boom of 2001-2008, the average construction completion time rose from 5.2 months to seven.

Our projections suggest it will rise sharply this time from 6.5 months to more than nine by the end of this year.

The impact will be felt by hundreds of thousands of Australian home buyers, builders, subcontractors and lenders.

Why can’t we build faster?

Homes are not built on production lines. Unlike other one-stop purchases like cars, each home is built individually.

And the method hasn’t changed much in 100 years.

The people we call builders are best described as project managers who rarely hire their own specialists or have long-term contracts with subcontractors.

The way they manage the process has not changed much since the introduction by A.W. Jennings in the 1970s. Construction checklists.

Read more: Housing prices are rising normally, but not for the reason you might think

This method is difficult to scale and does not respond to speed requirements.

It’s time for innovations like off-site construction and prefabricated structures, but it’s not clear that the authorities are particularly aware of the issue.

Now is the right time. Builders could take on the cost of changing processes when demand was high, taking advantage of changes when demand was falling.

But I don’t hope. Too much talk about housing in the abstract rather than how to achieve it concretely.

This article is republished from – The Conversation – Read the – original article.

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