Australia is grappling with a worsening housing crisis marked by a significant shortfall in supply and rapidly declining affordability. A confluence of structural challenges—from labour shortages and high construction costs to ineffective planning systems—has placed immense pressure on both home buyers and renters. Despite policy ambitions and a booming migration intake, the country is falling far short of its housing construction targets.
The National Housing Accord and the Reality Gap
The Federal Government’s National Housing Accord, announced in 2022, set an ambitious target of building 1.2 million new homes over five years beginning July 2024. However, the National Housing Supply and Affordability Council’s (NHSAC) State of the Housing System 2025 report reveals that only 938,000 dwellings are expected to be constructed by June 2029 (NHSAC, 2025). This leaves a gaping shortfall of 262,000 homes.
Even more concerning, once demolitions are accounted for, the net new supply drops to 825,000 dwellings, which is 79,000 fewer than projected demand over the same period. The shortfall isn’t isolated to a single state or region; no Australian state or territory is on track to meet its share of the housing target.
2024: A Year of Record Lows in Construction
In 2024, Australia recorded its lowest number of housing completions in over a decade, with only 177,000 new dwellings built despite underlying demand for 223,000 homes (Realestate.com.au, 2024). This deficit has added significant upward pressure on property prices and rents, intensifying the affordability crisis.
The downturn in construction activity was driven by three core factors:
- Labour shortages: Trade and construction sectors have been plagued by workforce gaps exacerbated by a post-COVID skills drain and limited training pipelines.
- Material costs: Global supply chain disruptions and inflation pushed building material prices to record highs, increasing the cost of construction across all sectors.
- Financing challenges: Developers have faced tighter lending conditions due to interest rate volatility and macroeconomic uncertainty, causing project delays and cancellations.
The Human Cost: Declining Affordability
According to the NHSAC (2025), median-income households now need 10.6 years to save for a 20% deposit on a median-priced home, up from just 8 years a decade ago. Meanwhile, mortgage repayments on new loans consume approximately 50% of a household’s median income, rendering homeownership increasingly unattainable.
The situation is no better for renters. New lease costs now absorb 33% of the median income, while over 50% of low-income renters are in rental stress—spending more than 30% of their income on rent (News.com.au, 2025).
Regional Breakdown: A Nationwide Struggle
The shortfall is particularly acute in fast-growing outer suburbs and regional hubs. For example:
- Queensland is expected to miss its housing target by 96,000 homes, delivering only 151,000 of the needed 247,000 by mid-2029 (Courier Mail, 2025).
- Western Australia and Victoria are both lagging behind their targets due to chronic under-investment in planning and development approvals.
Compounding this issue is Australia’s high rate of population growth—driven by migration—which adds to housing demand particularly in metropolitan and peri-urban areas.
NHSAC Recommendations: A Path Forward
To address the crisis, the NHSAC proposes a multifaceted strategy:
- Scale up social and affordable housing through direct public investment and private-public partnerships.
- Boost construction productivity by streamlining building approvals, embracing modular housing technologies, and increasing workforce participation.
- Reform planning systems to allow for higher urban density and quicker land rezoning.
- Support renters via rental subsidies, rent caps, and increased tenant protections.
- Align tax policy with housing supply objectives, including reforms to negative gearing and capital gains tax incentives.
Conclusion: A Call for Unified Action
The data paints a sobering picture: Australia is not only falling short of its housing construction goals, but doing so at a time when demand is accelerating. The cumulative effect is a housing system under duress, with millions of Australians locked out of homeownership or facing rental stress.
Only a coordinated approach—bringing together federal, state, and local governments, along with the private sector—can reverse this trajectory. Time is of the essence. Every delay in action today deepens the affordability crisis tomorrow.
References
Courier Mail. (2025, May 13). Housing crisis: Queensland projected to fall 96,000 homes short of its target. https://www.couriermail.com.au/real-estate/queensland/brisbane/housing-crisis-failure-96000-homes-short-of-qld-target/news-story/8b62bae78d0d2b7f6be2c114da491a8f
MacroBusiness. (2025, May 16). Government forecasts permanent housing shortage. https://www.macrobusiness.com.au/2025/05/government-forecasts-permanent-housing-shortage/
National Housing Supply and Affordability Council. (2025). State of the Housing System 2025 [PDF]. https://nhsac.gov.au/sites/nhsac.gov.au/files/2025-05/ar-state-housing-system-2025.pdf
News.com.au. (2025, May 9). 10.6 years: Dire reality for Aussies revealed in State of Housing report. https://www.news.com.au/finance/real-estate/buying/106-years-dire-reality-for-aussies-revealed-in-state-of-housing-system-report/news-story/9bdb68cf61ae1704749df2c84d4f718c
Realestate.com.au. (2024, November 22). Significant uplift needed: The home building shortfall Australia needs to meet. https://www.realestate.com.au/news/significant-uplift-needed-the-home-building-shortfall-australia-needs-to-meet/