Australia’s ambition to lift national housing supply may falter unless governments address mounting regulatory barriers, planning delays, and persistent workforce shortages, according to a new industry report.
The 2026 Small Business Conditions Report, published by the Housing Industry Association (HIA), surveyed small building businesses across the country and found strong demand for new housing projects — but equally strong operational pressures weighing heavily on builders.
HIA Managing Director Jocelyn Martin said small builders form the “engine room” of Australia’s home building sector yet are shouldering increasing demands with dwindling resources.
She warned that current conditions, if left unchecked, could undermine both business viability and the nation’s broader housing supply goals.
The survey highlights a growing sense of strain among builders. Due to excessive red tape, 68 per cent of respondents said they had considered scaling back operations or closing, while nearly three-quarters reported no plans to hire additional staff over the next 12 months.
These figures, the HIA noted, point to a widespread loss of confidence among small operators battling an ever-expanding compliance burden.
Planning and approval delays also loom large. The report found that 88 per cent of builders encounter approval timeframes longer than eight weeks, with one in three waiting more than six months for development consent.
HIA’s analysis suggests these prolonged delays inflate holding costs, postpone construction starts, and heighten financial risks — factors that together constrain overall housing supply at a time when new dwellings are urgently needed.
Labour shortages compound the problem, with two-thirds of respondents reporting difficulty in recruiting or retaining skilled tradespeople, limiting their ability to meet project timelines or expand their operations.
Without relief in the construction workforce, businesses warn they may struggle to meet both current demand and future national housing targets.
The compliance workload facing small builders remains substantial. More than half of survey participants said they spend at least five hours a week managing regulatory obligations, while nearly one in three devotes over 10 hours weekly to such tasks.
The administrative effort often comes at the expense of on‑site productivity and business development, forcing some companies to reassign staff purely to handle paperwork.
The financial implications are equally concerning. Small builders face dim financial prospects, with 59 per cent not expecting profitability to improve in the 2025–26 financial year compared with the previous year, and nearly two-thirds reporting that planned changes to the National Construction Code (NCC 2025) have had a moderate or major impact on their business operations.
Rising insurance premiums and prolonged assessment processes further erode margins and discourage investment.
The human impact is apparent as well, with 88 per cent of respondents reporting higher stress levels due to compliance demands, and more than half stating that they had hired or reassigned employees to manage administrative or regulatory tasks.
Targeted policy reforms, such as streamlining approval systems, reducing administrative overhead, and supporting workforce training, could ease these pressures.
Without decisive action, the association warned, small builders may be unable to deliver the increased housing supply required to meet national population and affordability goals in the years ahead.
