For much of the past decade, a new house on the suburban fringe represented the more attainable end of the property market. Buyers accepted a longer commute in exchange for a modern home and a manageable price.
That equation is breaking down.
In this episode of The Positive Property Show, George Markoski puts it bluntly: the $500,000 new build is disappearing. His point is not simply that land has become dearer. It is that the cost of turning an approved block into a completed home has shifted structurally.
The affordable product is becoming harder to produce
New home construction costs are influenced by far more than timber and concrete. Fuel affects freight and machinery. Petrochemical prices flow into products such as PVC piping. Labour shortages lift subcontractor rates, while finance and insurance add pressure before work begins.
The National Housing Supply and Affordability Council found that construction costs per square metre rose during 2024–25 by 6.7 per cent for detached houses, 9.8 per cent for townhouses and 10.2 per cent for apartments. Cost growth may have slowed from its post-pandemic peak, but slowing inflation does not mean prices return to their old level.
This distinction matters. A household can postpone a renovation or choose cheaper finishes, but there is a limit to how much cost a builder can remove from a compliant home. Once a project no longer produces an acceptable margin, it is delayed, redesigned or abandoned.
Builders are carrying more risk than buyers can see
George’s observation that “you can’t import a roof” captures the local nature of the problem. Housing may rely on global materials, but it still needs Australian trades to assemble it, one site at a time.
The sector is also less productive than it was three decades ago. The Productivity Commission estimates that quality-adjusted labour productivity in housing construction has fallen 12 per cent, while productivity across the broader economy increased substantially.
Thin margins make that weakness dangerous. According to the Housing Council, 3,325 construction businesses entered insolvency in the 12 months to March 2026. That was lower than the previous year, yet remained well above historical levels. Every failed builder can leave unfinished work and fewer firms available to deliver the next round of housing.
Fixed-price contracts can intensify the risk. They give buyers certainty, but when labour or materials rise unexpectedly, the builder may absorb a loss. A cheap quote is therefore not necessarily a safe quote.
The cost problem becomes a supply problem
Australia’s National Housing Accord targets 1.2 million new homes over five years. The Housing Council’s April 2026 assessment estimated about 980,000 would be completed, leaving an implied gap of roughly 220,000 homes before allowing for further global disruption.
That shortfall connects construction economics directly to affordability. When entry-level projects do not proceed, fewer homes reach buyers and renters. Demand shifts towards established stock, adding pressure to prices and rents.
The episode also features members Charmaine and Greg, whose two investments recorded substantial valuation gains according to figures presented on the show. Their experience illustrates the other side of constrained supply: existing owners may benefit while aspiring buyers face a higher barrier to entry.
For anyone considering a new build, the lesson is not to assume yesterday’s price will return. Examine the builder’s track record, contract escalation clauses, exclusions and contingency allowance. For investors, watch completions and insolvencies alongside approvals. A plan on paper does not ease a housing shortage. Only a finished home does.
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