NSW Faces Labor Shortage Hurdles, New Home Targets May Prove Elusive—Sydney Auction Clearance Rate At 68%

Week’s Key Focus

NSW is currently grappling with a significant labor shortage in the construction industry, casting shadows over the ambitious targets set for new home constructions. This predicament is raising concerns that the state may struggle to meet the federal government’s objective of building 1.2 million new homes over the next five years. For NSW, this translates to an average requirement of constructing 75,000 homes annually—a figure that doubles the current pace of development.

Chris Minns, the Premier of NSW, has highlighted the urgent need to attract skilled migrants, particularly foreign construction craftsmen, to Australia to address this acute skills crisis. In an interview with Sky News, Minns stressed that NSW is facing severe supply constraints in new home construction and called for federal government assistance, especially in bolstering the workforce of builders across the state.

A recent report by BuildSkills Australia underscores the depth of the challenge, indicating that an additional 90,000 construction workers are needed within the next three months to achieve the federal housing target by 2029. Major national infrastructure projects, like the Western Sydney Airport, are expected to be among the hardest hit by the shortage, with projections showing the number of construction workers needs to increase from 590,000 to 680,000 as soon as July this year.

Furthermore, a recent analysis revealed that the supply of new homes in NSW is not keeping pace with demand, prompting many young Sydneysiders to relocate to other cities in search of more affordable housing options. Peter Achterstraat, NSW’s Productivity Commissioner, warned in March that without action, Sydney risks becoming a “city without grandchildren.”

Premier Minns described these insights as alarming, noting that an entire generation is at risk of never owning a home. He criticized the excessive regulation and red tape that has led to a decade-long undersupply of housing in Sydney and the tendency of governments at all levels to say no without considering the consequences.

Amid these challenges, addressing the labor shortage and accelerating housing construction becomes increasingly critical for the future sustainability of living conditions and the well-being of younger generations.

Auction Results Last Week

Sydney: 908 properties were up for auction, with results reported for 549 of them. 371 properties were sold, resulting in a clearance rate of 68%. The total auction value was AUD 388,410,072, with a median price of AUD 1,490,500.
Melbourne: 707 properties were up for auction, with results reported for 475 of them. 302 properties were sold, resulting in a clearance rate of 64%. The total auction value was AUD 232,663,220, with a median price of AUD 837,500.