From planning delays to workforce shortages, small builders say pressures are mounting across the sector.
Under the National Housing Accord, Australia aims to build 1.2 million new homes by mid‑2029, a target that relies heavily on the capacity of builders – many of whom are small businesses – to increase output.
According to the Housing Industry Association (HIA) 2026 Small Business Condition Report, the combined impact of planning delays, workforce shortages and rising regulatory costs poses a direct risk to the delivery of new housing unless governments at all levels intervene.
The survey found that 68% of respondents had considered scaling back because of red tape. Picture: Getty
Surveying HIA members across all areas of the building sector who identify as small businesses, the report measured sentiment across the industry and assessed how the home building sector may perform from 2026 onwards.
HIA managing director Jocelyn Martin said the report “paints a clear picture” of a sector under pressure, despite strong demand for new housing.
“Small building businesses are the engine room of Australia’s home building industry, but they are being asked to do more with less — facing rising insurance premiums, growing compliance obligations and planning delays that are stretching cashflow and eroding confidence,” Ms Martin said.
Those pressures are already influencing business decisions across the sector.
According to the results, 68% of respondents said they had considered scaling back or closing their business due to red tape and compliance burdens, while almost three‑quarters do not expect to take on additional staff in the year ahead.
Planning delays were identified as a major barrier to productivity.
The survey found 88% of small builders are dealing with approval timeframes exceeding eight weeks, while one in three experienced delays of more than six months.
“For small businesses, time is money and lengthy approval processes mean higher holding costs, delayed starts and increased financial risk, which reduces the number of homes that can be delivered,” Ms Martin said.
At the same time, workforce constraints are compounding these challenges, with 67% of small builders reporting difficulty recruiting or retaining workers.
The results showed that 88% of small builders face approval timeframes longer than eight weeks. Picture: Getty
Other findings show 63% of respondents said changes introduced under the National Construction Code (NCC) 2025 had either a moderate or major impact on their business, adding further pressure to already stretched operations.
The NCC sets minimum standards for new buildings, covering areas such as design, safety and sustainability, and is typically updated every three years.
In response to industry concerns about cost, complexity and delays, the federal government announced, in August 2025, that it would freeze further updates to the NCC until the end of the National Housing Accord.
The pause is intended to provide greater regulatory certainty for builders, helping to speed up construction and reduce the risk of additional compliance costs or redesigns that can slow projects.
“Streamlining planning systems, reducing compliance burdens and providing greater regulatory certainty would immediately improve productivity across the small business sector,” Ms Martin said.
“Targeted support for apprentices, skills pathways and technology adoption would help small builders expand their workforce and lift output.
“With the right policy settings, small building businesses will play a central role in delivering more homes, faster, but without reform housing supply will continue to fall short.”
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