Confidence crisis as nine in ten Aussies mistrust building industry

The building industry, struggling with sluggish approvals, rising insolvencies and an inability to meet housing supply needs, is also facing another uphill battle – restoring its tarnished reputation.

A shocking nine in ten Australians say they are concerned builders will cut corners to reduce costs (90 per cent) or deliver homes faster (89 per cent).

Fewer than half of consumers have an overall positive perception of the construction industry.

That’s actually an improvement on the low bar set in 2024, when just under a third (32 per cent) felt positive about the industry.

The research by data, analytics and technology company Equifax revealed that a lack of trust beset the building sector.

Nearly eight in ten (78 per cent) Australians admit they are concerned about construction insolvencies, while half (51 per cent) are more concerned about builders going bust before completing a project than they were a year ago.

Additionally, half (51 per cent) of consumers have little or no confidence in the quality and long-term durability of newly built apartment buildings or build-to-rent developments.

Consumers’ fears are seemingly vindicated by construction insolvencies remaining at historically high levels and accounting for the highest proportion of among all industry sectors in July, with 341 reported. This was an increase of 4 per cent from the same month the previous year, and more than twice as high as pre-pandemic levels.

Brad Walters, General Manager, Commercial at Equifax, said their research revealed that 53 per cent of Australians believe there aren’t enough protections in place to safeguard consumers from construction companies going bust or delivering poor projects.

“Given the need for more housing and the Government’s focus on increasing supply, it’s paramount that Australians can rely on construction industry professionals to deliver trustworthy built assets,” Mr Walters said.

Industry reform opportunity

The grim research findings come as the federal government weighs up changes to the National Construction Code (NCC). It has paused changes to the residential component of the NCC until mid-2029.

 The aim is to cut red tape while retaining or improving safety and quality. It’s no simple task revising the code – it’s 1,500 pages in three volumes of rules that builders need to follow.

The Australian Building Codes Board (ABCB) is responsible for writing, producing and maintaining the code on behalf of the federal and state and territory governments who separately regulate the code.

“The goal of the NCC is to enable the achievement of nationally consistent, minimum necessary standards of relevant safety (including structural safety and safety from fire), health, amenity and sustainability objectives efficiently,” the ABCB notes.

Master Builders General Manager – Policy & Advocacy, Dyan Johnson, said the federal government’s pause on residential changes to the NCC presented a rare opportunity for transformative change.

“The key to success here is asking whether existing policies and technical changes deliver a clear net benefit for the community and our industry. Anything that fails that test needs to be abandoned,” Ms Johnson said.

“We need to make sure the NCC focuses on what really matters: building homes that are safe, high-quality, and practical to deliver.

“We will seize the opportunity of the review to ensure that future changes to the Code are required to pass buildability and supply-readiness tests before being adopted, and to make the case for free access to the referenced Australian Standards,” she said.

The NSW Government is also pushing forward with the most exhaustive planning reform program in 50 years to accelerate housing supply.

Premier Chris Minns has described the process to build a house or apartment in New South Wales as a maze and the planning system as intolerable.

“At the moment, in some instances, [builders] have to go and collect approvals or reports from 20 different government agencies.”

The centrepiece of the proposed reform is a Development Coordination Authority that would be the “single front door” to provide advice on applications on behalf of all government agencies.

Applications for minor changes like home renovations would be deemed approved unless knocked back by a council within 10 days.

Some have said the reforms don’t necessarily go far enough.

The Australian Institute of Building Surveyors (AIBS) has warned that approvals are only one part of the process and that bottlenecks downstream risk undermining the benefits.

AIBS CEO Sid Gokani said speeding up approvals is only one piece of the puzzle.

“Unless we also ensure the downstream parts of the process - like compliance, enforcement and industry competence - can keep up, consumers will wear the cost.

“Reforms like mandatory professional development and recognition of qualifications, which have been shelved for years, would make a real difference to lifting standards and ensuring buildings are fit for purpose.”

Mr Gokani said a more holistic approach is needed.

“Resourcing the Building Commission and local councils, reinstating continuing professional development, and enabling industry bodies to help speed up the recognition of qualifications - these would deliver safer, more reliable housing outcomes for consumers.”

Housing shortfall

Diana Mousina, economist with AMP Capital, said Australian housing completions currently sit around the 180,000 mark. This is below the government’s targeted levels, which are closer to 240,000.

“Supply has been challenged in Australia because of poor productivity growth in construction, development delays, slow land release, too much regulation and labour and material shortages,” she said.

“While it would be good to see supply running at close to 240,000 per year in the next few years, this will be challenging in the current environment.

“Our forecasts are for housing completions to average at 190,000 per year, which is a lift of around 10,000 from where we saw supply a year ago.”

Australian Bureau of Statistics data released in September showed that the total dwellings approved  in July fell 8.2 per cent to 15,769.

Approvals for total dwellings were mixed in July: New South Wales (-24.6 per cent) and South Australia (-1.3 per cent) fell, while Tasmania (12.2 per cent), Western Australia (11.8 per cent), Queensland (5.9 per cent), and Victoria (0.7 per cent) rose.