Housing quantity and quality don’t mix


The ABC was at it again last week admonishing “shoddy development work” across NSW.

This followed the admission by NSW Building Commissioner David Chandler that “53% of apartments registered from 2016 to 2022 have at least one serious defect”.

Now the ‘standalone regulator’, the NSW Building Commission, is up and running and has promised to crack down on dodgy developers and boot them from the industry.

At the same time, the state government has committed to meeting its target of building an average of 75,000 new dwellings a year over the next five years.


This will inevitably create a conflict between quantity and quality, as noted by building regulation lawyer, Bronwyn Weir:

“The issue is that governments are spending millions and billions of dollars, including the federal government, to try to address housing supply … and we potentially will have a ballooning in these legacy issues if there aren’t steps taken across the country to ensure that what we build with all this government funding is done in a compliant and safe way”,

“The federal government should be demanding that states and territories are accountable for not just delivering new homes at a rapid pace, but new homes that meet the minimum standards of safety and compliance”.

The reality of the situation is illustrated in the next chart, which shows that the surge in apartment defects in NSW coincided with the huge lift in construction volumes in the second half of last decade:

NSW dwelling completions

The reality is that whenever developers ramp up volumes, corners will be cut and build quality will decline.

However, if NSW (and other states) do not ramp up construction, then housing shortages will worsen placing upward pressure on both prices and rents.

The first best solution, therefore, is for the federal government to dramatically lower net overseas migration to take the pressure off demand.

Historical NOM

Moderate population growth would ensure that population demand runs behind supply capacity, thereby alleviating the housing shortage and encouraging builders to focus on quality of construction over quantity.

Australia must not repeat the mistakes of last decade when hundreds of thousands of low-quality, defective apartments mushroomed across our major cities to house their ballooning populations.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.