Residential Construction Market Outlook for 2025

As we head into 2025, the residential construction market is facing a blend of challenges and opportunities. As a specialist in hiring for the residential construction sector, I took a deep dive into the latest data and insights to better understand what’s happening and here's what I found:

Demand for Housing

Despite rising interest rates and ongoing inflation, demand for new housing is expected to stay strong. Housing Industry Association forecasts predict a 3% increase in residential building activity in 2025, driven by demand in both major cities and regional areas. According to the Australian Bureau of Statistics, population growth and a desire for homeownership remain key drivers.

Construction Costs

While the surge in building materials costs has eased slightly since the pandemic, they remain high. CoreLogic reports that construction costs have risen by 7.7% over the past year, particularly for materials like timber, steel, and concrete. To stay competitive, cost-effective design and material innovation will be essential.

Labor Skill Shortages

The biggest challenge for the Australian residential construction industry heading into 2025 is the ongoing skills shortage. Data from the National Skills Commission indicates that the sector will need to add over 200,000 workers by 2025 to meet demand. At JV Recruitment, we employ only labour and trades staff with at least 12 months of onsite experience, ensuring quality and reliability.

Affordability

Housing affordability remains a major concern. The Reserve Bank of Australia reports that the combination of high interest rates and rising construction costs has made homeownership less accessible, especially for first-time buyers. This has increased demand for affordable housing options, such as townhouses and medium-density developments. Builders who can deliver quality, affordable homes will be well-positioned in 2025.

Technology Integration

Smart homes and tech-driven construction methods are gaining traction. Australian builders are increasingly adopting innovations like 3D printing, modular construction, and AI-driven design tools. A McKinsey report projects that 25% of new homes in 2025 will feature smart home technology, enhancing energy efficiency, security, and convenience, and meeting growing buyer expectations.

As demand for housing persists and the skills gap remains a challenge, attracting and retaining top talent will be crucial. Early recruitment and investing in workforce development will be key to staying competitive, particularly in high-demand roles.

For any labour hire or permanent staffing needs in 2025, you can rely on JV to get #WorkDoneRight. Contact our team today!

About the Author
Fiona Lauder is a Permanent Recruitment Consultant at JV Recruitment Sydney, specialising in roles across the construction sector, including Site Managers, Project Managers, and more. Originally from Scotland, Fiona has over six years of recruitment experience and a passion for connecting top talent with exciting opportunities. Fiona is dedicated to building high-performing teams and making a positive impact, and when she’s not helping clients and candidates, Fiona enjoys powerlifting, experimenting with new recipes, and attending music festivals.

Connect with Fiona to discuss your recruitment needs or explore career opportunities in construction!