The Housing Crisis is Built on Inefficiency

1. Traditional Construction is Slow, Costly, and Inconsistent

Unlike other industries that have embraced automation, data, and systems thinking over the past century, construction has remained largely unchanged. Building a home in Australia today is not fundamentally different from the way it was done decades ago:

• Work is done on-site, in the open air, subject to weather delays.
• Dozens of trades are coordinated manually.
• Customisation and fragmentation lead to unpredictable costs and timelines. As a result, homes take too long to build, cost too much, and vary widely in quality.
  
  

2. Productivity in Construction Lags Behind

According to a 2017 McKinsey Global Institute report, construction is one of the least productive major industries in the world. Over the past 20 years, industries like manufacturing, agriculture, and even retail have achieved dramatic gains in productivity—yet construction has seen little improvement. It’s telling that more than a century ago, in the 1920s, New York City was already building 300+ metre skyscrapers with reinforced concrete and steel. Meanwhile, most homes in Australia are still built with timber frames on-site, by hand. Imagine if we were still using a ten-year-old smartphone today. In tech, such stagnation would be unimaginable. But in construction, it’s normal.

3. When Inefficiency Becomes Profitable

There’s another layer to this crisis: inefficiency benefits many stakeholders in the current system.

• Builders and trades enjoy high demand and premium wages. Construction remains one of the highest-paying industries in Australia.
• Developers and investors benefit from rising property values, which mask underlying inefficiencies.
• Regulators and councils rely on ongoing demand and activity to sustain fees and approvals. In this ecosystem, there’s little incentive for deep reform—until the system begins to break down. And that’s where we are now.
  
  

4. The Social Cost is Too High

The burden of this inefficiency falls on society:

• First-home buyers are priced out of the market.
• Renters face rising costs with no security.
• Governments struggle to meet housing targets despite record spending. More than just an economic concern, housing has become a structural drag on quality of life and national productivity.
  
  

Conclusion: Efficiency is Not a Luxury—It’s a Necessity

Fixing the housing crisis requires more than subsidies or zoning tweaks. It requires a radical rethink of how we build homes in the first place.

We must move away from the slow, manual, project-based model that defines traditional construction. Without addressing the systemic inefficiency at the heart of the housing industry, no lasting solution is possible.