By Poppy Johnston in Canberra

Barriers holding back home-building are complex, involve all levels of government, and have built up over time, Treasury secretary and Reserve Bank board member Steven Kennedy says.

The limited supply of new dwellings as the population grows is making houses unaffordable for households to find a property to buy or rent.

In an opening statement at a parliamentary hearing on Monday, Dr Kennedy said the pandemic was in part responsible for sluggish construction.

Supply chain bottlenecks and the inflated cost of materials and financing stemming from the COVID-19 outbreak were compounding existing structural issues in the housing market that were “complex and had built up over time”.

“They involve all levels of government, as well as industry and community housing suppliers,” Dr Kennedy said in a an opening statement.

A lack of essential infrastructure in greenfield sites was flagged as a barrier, as well as labour shortages and low productivity performance in the sector.

The National Housing Supply and Affordability Council, which was set up by the federal government, found the average time from approval to completion for a new home is around 12 months, up from nine months in 2019.

Dr Kennedy also said there had been a long-term under-investment in social housing by governments, leading to lengthening wait lists.

“Because of the complexity of this system and the responsibility sitting with all levels of government, concerted action is needed to address these barriers and supply for the long term,” he said.

Commonwealth and states and territories governments have agreed on an ambitious target of 1.2 million new well‑located homes over five years from mid‑2024 to boost supply.

Dr Kennedy said the federal government’s policies were “sensibly focused on boosting the supply of housing”.

“However, meaningful progress cannot occur unless the states use their policy levers to boost supply and longer term, allow the housing supply to adapt more flexibly to changes in housing demand,” he said.