Skilled trades in Australia’s residential sector have gone unrecognised on the federal government’s Skills Priority List despite a slowing in building activity, according to HIA senior economist Tom Devitt.

The summary follows the HIA Trades Report which provides a quarterly review of the availability of skilled trades and any demand pressures on trades operating in the residential building industry.

“The HIA Trades Availability Index sat at -0.58 in the first quarter of 2024, moderating from -0.64 at the end of last year. This is the least acute shortage of skilled trades across the country in almost three years, consistent with the slowing in building activity,” Tom says.

“While this is a welcome improvement, it is still among the most acute shortages of skilled tradespeople in Australia since HIA first published this report in 2003.”

Despite home building pipelines shrinking rapidly under the weight of the RBA’s rate hikes, Tom says public infrastructure projects have been absorbing a lot of skilled trades, as have other non-residential projects, resulting in improvement in trade availability stalling for much of last year and the prices of these trades continuing to rise faster than normal.

If Australia expects to build 1.2 million homes over the next five years it will need to increase its skilled labour pool, requiring two key policy actions from the government, according to Tom.

“The first is to maintain assistance from the Australian government for those employers that train apprentices and directly for apprentices. Financial incentives which encourage the employment of an apprentice and improve retention have proved invaluable to helping the construction industry to access more workers,” he says.

“The second is to allow the building industry to access skilled labour from overseas to respond to the boom-and-bust cycles caused by government policy settings.

He adds that there is uncertainty around the possible exclusion of important home building trades.

“The ability to access skilled trades at times when building activity increases can assist in easing the acute shortage of housing,” he says.