Housing Crisis in Australia: Deeper Trouble Ahead

6

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Issues such as high construction costs have accelerated the cost of building in major cities at a rate that outpaces property price growth. It increasingly appears more financially sound to purchase an existing home rather than build a new one.

According to Tim Lawless, CoreLogic's research director, "the cost of construction is yet to decline and it remains approximately 30% more expensive to build or renovate now compared to pre-COVID times," reflecting a prolonged period of inflating expenses.

SQM Research's founder and managing director, Louis Christopher, has expressed concern. He pointed out that "indicators show no signs of an imminent increase in housing supply," and has projected that there will be only "138,000 new dwellings completed by FY25."

PropTrack's executive manager for economic research, Cameron Kusher, noted, "Building approvals have plunged to their lowest in a decade. The pandemic-induced rise in construction costs, labour shortages, and 12-year high interest rates have severely impacted new constructions."

Adding to the discourse, Ben Burston, chief economist at Knight Frank, warned that "restoring high levels of housing construction will be a laborious task" due to the steep increments in both construction and financing costs.

The Australian Bureau of Statistics (ABS) revealed that only 163,800 homes were approved for construction in the year up to May. This is 32% (or 76,200 homes) short of the Albanese government’s 240,000 annual housing target.

It is crucial to note that the Albanese government’s target of 240,000 homes annually is unprecedented. The closest the nation came to meeting such a goal was in 2017 when 223,600 homes were built, which was still 7% below the target. This was achieved with a cash rate of 1.5%, compared to the current rate of 4.35%.

Back in 2017, builders also faced lower construction costs (some 40% less than today) and did not compete for labour with state government infrastructure projects. In comparison, data from the Australian Securities and Investments Commission (ASIC) show that nearly 3,000 construction firms went bankrupt in the 2023-2024 financial year, reducing the sector’s productive capacity.

Given these macroeconomic conditions, it seems highly improbable for the Albanese government’s housing targets to be met, and dwelling completion rates are likely to remain low in the near term.

Ultimately, a long-term resolution to Australia’s housing shortage may necessitate reducing net overseas migration, hence easing the population demand below the nation’s housing and infrastructure supply capacity.

If these structural issues aren't addressed, Australia's housing crisis is poised to exacerbate.

Published:Tuesday, 16th Jul 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Finance News

Clear

ANZ Bank's $160 Million Fine Highlights Regulatory Compliance Failures

09 Nov 2025: Paige Estritori

In a landmark decision, ANZ Bank has agreed to pay a record-breaking A$240 million (approximately US$160 million) fine for a series of serious regulatory breaches. This penalty underscores the growing emphasis on compliance and accountability within Australia's financial sector. - read more

ASIC's Comprehensive Review of Australia's Motor Vehicle Finance Sector

01 Nov 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has commenced a thorough review of the motor vehicle finance sector, focusing on strengthening consumer protections and ensuring industry compliance with responsible lending obligations. This initiative aims to address potential risks and improve the experiences of borrowers across Australia. - read more

Australian EOFY Car Deals Hit Record Highs in 2025

01 Nov 2025: Paige Estritori

The 2025 End of Financial Year (EOFY) period witnessed an unprecedented surge in car deals across Australia, marking a significant milestone in the automotive industry. According to an analysis by TheBeep.com.au, the number of car deals in June 2025 reached 190, representing a 39% increase from the 137 deals recorded in 2024. This substantial growth underscores the intensified competition among automotive brands striving to clear stock before the June 30 deadline. - read more

EV and Hybrid Vehicle Financing in Australia Reaches $6.17 Billion in 2024

01 Nov 2025: Paige Estritori

The Australian automotive finance sector has experienced a remarkable surge in support for electric (EV) and hybrid vehicles, with financing volumes escalating from $250 million in early 2023 to an impressive $6.17 billion by the end of 2024. This substantial growth underscores the pivotal role of financial institutions in facilitating the nation's transition to low-emission transportation. - read more

Affordable Electric Vehicles: New Low-Interest Loans for Eligible Australians

24 Oct 2025: Paige Estritori

The Australian government has launched a new initiative to make electric vehicles (EVs) more accessible to a broader segment of the population. This program offers low-interest loans to individuals earning less than $100,000 annually, as well as essential workers, facilitating the purchase of new and used EVs priced up to $55,000. - read more

RBA Weighs Additional Rate Cuts Amid Economic Indicators

16 Oct 2025: Paige Estritori

The Reserve Bank of Australia (RBA) is currently evaluating the necessity of further interest rate cuts in light of recent economic developments. Following three reductions earlier this year, bringing the cash rate to 3.6%, the central bank is closely monitoring indicators such as consumer spending and inflation trends to inform its monetary policy decisions. - read more

Navigating Car Loan Approval Timelines in Australia

16 Oct 2025: Paige Estritori

Securing a car loan is a pivotal step for many Australians aiming to purchase a vehicle. Understanding the approval process and the time it takes can help set realistic expectations and facilitate a smoother experience. - read more

Click for more Finance News