Governments are making the right moves on housing affordability but builders are still finding it "very challenging" to bring on new supply, RBA governor Michele Bullock says.
Speaking at a second parliamentary hearing in less than one week, Ms Bullock reiterated that a shortage of housing was the key issue.
"Governments seem to be making the right noises in terms of looking at ways of freeing up the ability to make it easier for developments, and high density I think is an important part of this," she said in Canberra on Thursday.
"When the bank talks to companies - building companies - in liaison, they say that the process of getting a high-density development approved is very, very challenging, particularly in New South Wales."
Liberal senator Andrew Bragg said Ms Bullock's turn of phrase - that governments were making the right noises - was revealing.
"I'd go further than that," she responded.
"In the NSW government's case, they are actually making moves."
In recent years, the NSW Labor government has increased allowable building heights around transport hubs, reduced local councils' ability to stall projects and streamlined the state's planning approvals pathways.
But planning delays remain a major barrier to builders nationwide, said the Housing Industry Association.
Almost nine in 10 builders surveyed in HIA's Small Business Conditions Report reported that approval time frames exceeded eight weeks, and one in three experienced delays of more than six months.
"For small businesses, time is money and lengthy approval processes mean higher holding costs, delayed starts and increased financial risk, which reduces the number of homes that can be delivered," HIA managing director Jocelyn Martin said.
Making it easier to win development approvals is only one piece of the puzzle.
Actually finishing projects has become harder since the COVID-19 pandemic as the industry has faced numerous constraints, Ms Bullock said.
"What we hear from our liaison, and this is easing somewhat, but certainly in the year or so coming out of COVID, the time taken to finish actually strung out because you couldn't get these trades, so there was a big backlog," she said.
While the industry remains well behind the National Housing Accord target of 1.2 million new homes over five years, there are some promising signs.
Houses are now almost one per cent cheaper to build than at the start of the accord in July 2024, Treasury housing group director general Ben Rimmer said.
"Houses are also getting faster to build," he told Senate estimates.
"There's been a 10 per cent improvement in that outcome over that same time period. One might think 10 per cent doesn't sound like much.
"That's a month off the average construction time, give or take, for detached dwellings. Which means the builder can move on to the next project faster, more houses getting built."
