The Productivity Commission has until March to tell government how to fix housing supply. The parts of the system a builder actually carries were ruled out of the inquiry before it started.
The Productivity Commission is running a national inquiry into the rules holding back housing supply. Its interim report landed on 27 July and described regulation as a handbrake on new homes.
There is a list in that report of what the inquiry will not examine. The National Construction Code is on it. So are policies affecting construction costs, labour supply in the construction industry, supply chains, the cost of building materials, and taxes including stamp duty.
Most of the coverage went to the upzoning proposals. The exclusions are the part that matters to anyone actually building.
What the inquiry covers, and what it was told to leave alone
The terms of reference were set by the Australian Government, not by the Commission. It was asked to identify the regulations that most affect housing supply, affordability and construction productivity, and to propose reforms in priority order.
In scope: land use controls, housing enabling infrastructure, and approval processes. The reform directions follow from that. Three storey development across most residential land. Mid rise and high rise in high demand areas near transport. Smaller minimum lot sizes. Faster assessment pathways. Developer contributions that are predictable and timed to suit development finance.
All of it sits upstream of the moment a builder is engaged.
The Commission is also candid about what it expects each direction to deliver. Relaxing land use controls is assessed as having the greatest effect on supply. Faster approvals and better developer contribution frameworks are expected to matter less.
The national inquiry into housing supply is aimed almost entirely at the part of the system that operates before a builder is engaged.
None of this means the excluded subjects are going unexamined. The report footnotes the reviews covering them, including Treasury’s work on the Code and the Commission’s own 2025 report on housing construction productivity.
That is the actual problem. The cost side, the labour side, the Code and the tax settings are each being handled somewhere, by someone, on a different timetable, and none of it is joined up with the inquiry that reports to government in March.
The target moved again while that work was under way
Australia committed to 1.2 million new homes in the five years to June 2029. On 21 August, the National Housing Supply and Affordability Council put the expected arrival date at the December quarter of 2030, one quarter later than it estimated in April. No state or territory is forecast to reach its share inside the Accord period.
Seven of the twenty quarters have been measured. In that time 308,000 homes were completed, about 26 per cent of the target with roughly 35 per cent of the clock gone.
A third of the target has been approved. Just over a quarter has been built.
The pipeline is full and it is moving slowly
Over the past twelve months, national approvals rose 8 per cent while completions fell 4 per cent. At the same time, 244,000 dwellings were under construction in the March quarter of 2026, the highest figure since the series began in 1984.
The constraint is not permission to build. It is the time and the capital it takes to turn an approval into a finished home.
We looked at the same split in July, when commencements went backwards while approvals held up. The inquiry does reach part of that gap, through infrastructure sequencing and utility connections. The rest of it is made of money, trades and time.
Builders are not disappearing, they are churning
There were 478,651 actively trading construction businesses in Australia at 30 June 2026, up from 463,048 a year earlier. That is a rise of 3.4 per cent, against 3.1 per cent across the economy as a whole. Behind it sit 83,004 entries and 67,401 exits.
Both numbers are real. Sixty seven thousand exits is an enormous amount of disruption for the trades, suppliers and clients attached to those businesses. But the count is growing, and across the economy the growth was concentrated in businesses with no employees, up 4.8 per cent against 0.2 per cent for employing businesses.
Insolvencies point the same way. Our analysis of ASIC data published on 14 September puts 3,472 construction companies entering external administration for the first time in the year to June 2026, against 3,596 the year before. Construction was still 24.5 per cent of all company insolvencies nationally.
August looks alarming on its own, at 815 construction appointments against 1,744 across every industry. ASIC attaches a note to that release stating the month includes appointments involving 542 related companies inside a single large property development and construction group, and that comparisons with earlier months should account for it. July recorded 292, against a monthly average of 289 across the previous year.
Churn and fragmentation, then. Not collapse. The difference matters when policy is being written about capacity.
The cost base did not move with the target
House construction costs rose 2 per cent in the June quarter of 2026 and now sit 51 per cent above where they were before the pandemic.
In real terms, costs are 0.2 per cent higher than when the Accord began. In March the same measure sat 0.9 per cent lower. Higher fuel and petrochemical prices moved it in between.
The Council is direct about what follows. Rising construction costs reduce the financial feasibility of projects, which is a near term risk to supply. Its State of the Housing System report modelled a 10 per cent peak increase in costs producing 33,000 fewer completions by the middle of 2029.
That is the mechanism the inquiry was told to leave out. At the builder end it is not an abstraction. It is the quote that no longer works, the contract signed before the last movement in prices, and the cash flow that has to absorb the gap between the two.
What out of scope means in a Productivity Commission inquiry
The terms of reference are written by the Australian Government, not by the Commission. Anything outside them cannot be recommended on, however relevant the evidence. The Commission can note a subject and point to another review covering it, and the interim report does exactly that for the Construction Code and construction productivity. It cannot make a recommendation about it in the final report due in March 2027.
The builder facing load is being handled in other rooms
The Code sits with Treasury under a separate modernisation project, which released its own interim report on 30 April 2026 and reports to Building Ministers late this year.
Payday super commenced on 1 July 2026. Superannuation now has to reach an employee fund within seven business days of payday rather than quarterly.
State building regulation, licensing and security of payment rules keep moving on their own timetables.
Each is defensible on its own terms.
They arrive from separate bodies, on separate timetables, and they land on the same business in the same month, while conditions across the Australian construction industry keep shifting underneath. That is the load, and no single process owns it.
Approvals are a permission, not a home
The 1.2 million was always a delivery number. Australia has never had more homes under construction, and completions are still going backwards.
The distance between those two facts is the part of the system a builder carries, and it is the part the national inquiry was told not to look at.
The final report lands in March. Whatever it recommends, the answer to why building is getting harder while the country asks for more homes will sit in the sections nobody was asked to write.
The Good Builder Take
Submissions on the interim report close on 30 September 2026, and the Commission is running a developer survey alongside it. Its information requests ask what causes approval delays, which requirements are most onerous to comply with, and what the development cost stack actually looks like. That evidence exists in our community already, in the form of dates, letters and invoices.
Frequently asked questions
Land use controls, housing enabling infrastructure and approval processes. The interim report of 27 July 2026 describes regulation as a handbrake on supply and proposes broad upzoning, three storey development across most residential land, smaller minimum lot sizes, faster assessment pathways and better coordinated infrastructure. Submissions close on 30 September 2026 and the final report is due to the Australian Government in March 2027.
The National Construction Code, policies affecting construction costs, labour supply in the construction industry, supply chains and building material costs, taxes including stamp duty, interest rates and finance, and housing demand. The Commission states these sit outside its terms of reference, which are set by the Australian Government, and points to other reviews examining several of them, including Treasury’s Code modernisation project.
The December quarter of 2030, according to the National Housing Supply and Affordability Council’s August 2026 Quarterly Report. That is eighteen months beyond the June 2029 Accord deadline and one quarter later than the Council estimated in April. Victoria, Western Australia and the ACT are estimated at December 2029, Queensland and South Australia at March 2031, New South Wales at March 2032, Tasmania at June 2034 and the Northern Territory beyond 2034.
Not in net terms. ABS business counts show 478,651 actively trading construction businesses at 30 June 2026, up 3.4 per cent on the year before, with 67,401 exits and 83,004 entries. Company insolvencies in construction fell to 3,472 in the year to June 2026 from 3,596, while still making up 24.5 per cent of all company insolvencies nationally.
Because an approval and a completed home are separated by finance, trades, materials and time, and that distance has lengthened. Approvals rose 8 per cent nationally over the past twelve months while completions fell 4 per cent. There were 244,000 dwellings under construction in the March quarter of 2026, the highest since the series began in 1984, which points to a pipeline that is full rather than empty.
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- State Variations Added 600 Pages to the 2022 Building Code. Treasury’s Fix Is a Recommitment, Not a Mechanism.
Last updated 16 September 2026. Figures reflect the NHSAC August 2026 Quarterly Report, ABS Counts of Australian Businesses released 18 August 2026, and ASIC insolvency statistics published 14 September 2026.
General information only. This article is intended for general informational purposes and does not constitute legal, financial or professional advice. Laws, regulations and industry requirements vary by state and territory and change over time. Builders and trades professionals should seek independent advice relevant to their specific circumstances before making business, legal or financial decisions.
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