Building tomorrow: How sustainable innovations in construction can drive Australia’s economic growth

With Australia’s lacklustre economic growth, the housing crisis and cost of living are taking centre stage as political issues, while concerns about climate change slip down the priority list for voters. However, a common thread runs through each of these issues: productivity in the construction sector. Construction comprises 10% of our economy, accounts for 18% of our carbon footprint and, unlike the rest of the economy, productivity in homebuilding has been declining for 30 years.

With a growing population, a housing shortage and a tight labor market, it is simply not sustainable for us as a country to keep doing what we’re doing. We must become more efficient so we can build more homes, faster, cheaper and with fewer emissions. Solving this issue would be a win for the economy, the environment, and society.

New research highlights Australia’s poor record on house construction productivity

Australia’s sputtering housing supply growth is pushing up housing costs, prompting governments to introduce multiple programs and ambitious targets to boost supply. However, new research from the Productivity Commission this month reveals that, over the past 30 years, housing construction productivity has declined by 12% (even after controlling for home quality improvements and increases in the size of housing), while productivity in the broader economy has grown by 49%. To meet the Government’s ambitious housing construction targets amid a constrained labour market, we must address our productivity inefficiencies.

Innovative construction methods show we can save emissions, time, and costs

Emerging research into construction innovations presents significant opportunities for improving efficiency and sustainability. Concrete is one area where big gains are being made. It is one of the most ubiquitous construction materials due to its costs and broad useability, with Australia producing 29 million cubic meters of pre-mixed concrete annually—enough to fill 18 Melbourne Cricket Grounds.

However, cement production is responsible for 8% of global carbon emissions. New methods, such as substituting cement for waste products, are helping to reduce emissions while increasing material strength. Meanwhile, nanotechnology has been shown to enhance the compressive, flexural and tensile strength of cement products, potentially reducing cement use while maintaining or improving performance. These advances could extend the lifespan of civil engineering assets by 20%.

Additionally, modular construction methods, such as 3D printing and precast fabrication, have the potential to accelerate project timelines and reduce construction and maintenance costs. For instance, precast concrete has been shown to reduce construction times by up to 20% compared to traditional on-site construction. When applied to housing projects, these methods can reduce build times from 1–2 years to as little as 3–4 months.

These innovations can drive economic growth and environmental savings

Given that construction represents 10% of our economy, adopting these innovations could not only lower emissions but also help speed up developments and contribute to economic growth. These kinds of advances can save households, industry, government and the environment considerably. Research from PwC Australia indicates that widespread implementation of modular construction, 3D printing, sharing spaces, district cooling and high-value recycling and reuse, could deliver $773 billion in direct economic benefits to Australia by 2040.

Progress is being made

The good news is that change is happening. Researchers are developing new methods, while government, industry, and financial institutions are taking action to support the transition toward more sustainable and efficient construction.

The Productivity Commission this month recommended that governments reduce unnecessary regulatory barriers to facilitate greater adoption of modern housing construction methods, such as prefabricated and modular construction. Time will tell how swiftly policymakers will act, but in the meantime some governments are already prioritising measurement of ‘embodied carbon’ (the emissions generated during the construction, maintenance and disposal of buildings).

The NSW Government’s guidance now encourages policymakers to consider embodied carbon emissions in decision-making from the outset, during infrastructure planning and in cost-benefit analyses of infrastructure options. Given the public sector’s significant share of construction spending, this focus should help shift construction methods in the public sector while creating beneficial spillover effects in the private sector.

Industry is also responding with modular construction methods. The prefab construction industry currently accounts for approximately 7% of the total value of residential and commercial building projects, but PrefabAUS estimates this could grow to 30% within the next decade. Concrete and construction material producers are also actively engaged in research, accelerating the development of sustainable alternatives in line with industry standards and market demands.

In the financial sector, significant strides have also been made. This month, the Commonwealth Bank, Australia’s largest mortgage lender, announced policy changes on construction loans and will begin offering loans for prefabricated home builds. This will unblock a key obstacle to building more homes in this way.

While challenges exist, there is a positive outlook for the future of housing construction in Australia. By embracing innovative construction methods, investing in material research and development and developing supportive financing mechanisms, we can build a more sustainable, efficient and resilient built environment for generations to come.