People don’t get the connection here.
There’s a reason why we can’t fix the housing shortage.
People think it’s easy. We just need more houses so build more houses.
Well, first, building a lot of houses isn’t easy at all. There’s land release and zoning and a whole bunch of things that need to happen before the first nail goes in the first piece of wood.
But that’s not all. Houses on their own are useless. You need roads. And then you needs schools and sports fields and waster water treatments plants and so on.
You need infrastructure.
So why don’t we just build more infrastructure too?
Well, that’s a good idea, but there’s a problem. The problem is that the same people who build houses are the same people who build infrastructure. The same materials to build houses are the same materials to build infrastructure and so on.
So if you try to ramp them both up at the same time you create bottlenecks. These bottle necks bid up the costs of labour and materials, and make both of them more expensive.
This is the point the Master Builders association was trying to make the other day, saying that the infrastructure build-out is creating labour shortages, especially in the ACT:
Australia will struggle to achieve its 1.2 million new homes target because competition for key trades and skills from the higher-paying infrastructure sector is depriving residential construction of the capacity it desperately needs, developers and builders say.
Homebuilders in ACT – a jurisdiction with a larger proportion of publicly funded projects than others – are competing for apprentices and workers against publicly funded projects such as light rail construction, hospital renovations and the Snowy 2.0 pumped hydro scheme, Master Builders ACT chief executive Michael Hopkins said.
“We are worried about skills running out of the housing sector at the time we need to be building new homes,” Mr Hopkins told The Australian Financial Review.
“There is certainly a risk that if we don’t consider the workforce impact of our major government projects on other sectors of industry that we will fail to achieve the National Housing Accord target of 1.2 million homes.”
Look, there is zero chance we will hit that target of 1.2m homes. I will buy Anthony Albanese an elephant if we hit that one.
But this is one of the reasons why – there is only so much labour and materials to go around.
The other is a constipated planning system.
An other is the fact that rising interest rates are sending builders broke all over the country.
An other is that all the low hanging fruit in terms of high-rise development has been gobbled up already.
I could go on.
But the broader point is that there is no silver-bullet when it comes to the housing shortage.
And on all estimates, that shortage is only going to get worse.
DB.