Skilled labour shortages continue to challenge Australia’s building industry

The Australian building industry continues to grapple with a shortage of skilled tradespeople, despite improved access to overseas labour, according to the latest Housing Industry Association (HIA) Trades Report. Released today, the report provides a detailed quarterly analysis of the availability of skilled trades and the ongoing demand pressures within the residential building sector.

HIA Senior Economist Tom Devitt highlighted the persistent challenges in the sector, stating, “Improved access to skilled labour from overseas is helping contain, but has not yet eased, the shortage of skilled trades people in the building industry.”

The HIA Trades Availability Index, a key measure within the report, recorded a value of -0.47 in the final quarter of 2025. This figure underscores the structural shortage of skilled trades in Australia, a situation expected to worsen as the volume of home building increases in the coming year. “The expectation is that this shortage will deteriorate further as the volume of home building grows over the next year,” Mr Devitt noted.

The anticipated recovery in home building activity is driven by several factors, including strong population growth, low unemployment rates, and tight rental markets. Furthermore, major construction projects linked to the upcoming Brisbane Olympics are increasingly absorbing excess labour from across the country. “Even with higher interest rates, home building activity is set to recover on the back of strong population growth, low unemployment rates and tight rental markets,” added Mr Devitt.

The shortage has prompted more employers in the construction industry to explore international pathways to secure skilled workers. At the end of 2025, there were over 8,600 457/482 visa holders in Australia sponsored by the construction industry, a figure that has doubled from just a few years earlier. This number surpasses the levels seen during the mining boom of the previous decade. Mr Devitt explained, “Western Australia and South Australia took in a disproportionate share of these arrivals, reflective of arguably the hottest home building markets in the nation.”

While these overseas workers represent less than one per cent of Australia’s total construction workforce, their presence indicates a positive trend towards expanding the workforce. “This increase in employer-sponsored workers in construction reflects some home building businesses shifting towards direct employment as a means of gaining secure access to workers,” Mr Devitt said.

However, Mr Devitt emphasised that relying on overseas labour is not a substitute for developing Australia’s domestic workforce capacity. He also pointed out that shortages of shovel-ready land remain a critical constraint on home building. “Shortages of shovel-ready land also need to be addressed as the number one constraint on home building,” he stated.

The report also highlighted significant price increases in land costs compared to skilled trade and building material prices. “While skilled trade and building material prices have more than doubled since the turn of the century, the price of the typical block of land has increased more than six-fold,” Mr Devitt said, adding that residential lot prices have re-accelerated to more than 10 per cent in the past year alone.

Policymakers face the dual challenge of containing land costs and ensuring an adequate workforce to meet current and future construction needs. “Policymakers need to work to contain land costs and ensure Australia has the workforce to meet its current and future construction needs,” concluded Mr Devitt.

The report also provides a regional breakdown of skilled trade shortages. New South Wales and Victoria experienced the most modest shortages in the December quarter of 2025, reflecting slower recoveries in home building. Regional South Australia showed notable improvement, while shortages persisted in Adelaide and Perth and worsened in Brisbane, regional Western Australia, and regional Queensland.

In terms of specific trades, the most acute shortages were observed in bricklaying, ceramic tiling, roofing, carpentry, and plastering. Electrical trades were the only area to report a surplus, with a reading of +0.05.