Housing Crisis in Australia: Deeper Trouble Ahead

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
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Finance News

Clear

Toyota Expands Electric Vehicle Offerings with Hilux BEV and bZ4X Touring

28 May 2026: Paige Estritori

Toyota has made significant strides in the Australian electric vehicle (EV) market with the recent launch of the Hilux BEV and the bZ4X Touring. These additions reflect Toyota's commitment to providing a diverse range of low-emission vehicles tailored to various consumer preferences. - read more

Electric Vehicles Capture 16.4% of Australian New Car Sales in April 2026

20 May 2026: Paige Estritori

In April 2026, electric vehicles (EVs) accounted for 16.4% of all new car sales in Australia, marking a significant milestone in the nation's automotive market. This equates to approximately one in every six new vehicles sold being electric, highlighting a rapid shift towards sustainable transportation. - read more

Australian Dwelling Finance Approvals Experience 3.8% Decline in First Quarter of 2026

20 May 2026: Paige Estritori

The Australian housing finance sector has witnessed a significant downturn, with new dwelling finance approvals falling by 3.8% in the first quarter of 2026. This marks the largest quarterly decline in three years, signaling potential challenges within the housing market. - read more

RBA Increases Cash Rate to 4.35% in May 2026

12 May 2026: Paige Estritori

The Reserve Bank of Australia (RBA) has raised the cash rate by 25 basis points, bringing it to 4.35% as of May 2026. This decision comes despite recent inflation figures showing a slight decrease, indicating the RBA's commitment to steering inflation back within its target range of 2% to 3%. - read more

Macquarie Bank's Mortgage Portfolio Expands by 27% in 2026

12 May 2026: Paige Estritori

Macquarie Bank has reported a significant 27% increase in its residential mortgage portfolio over the past year, solidifying its position as Australia's fifth-largest lender. This growth highlights Macquarie's successful strategies in capturing a larger share of the mortgage market, traditionally dominated by the big four banks. - read more

Australian Savings Rates Climb to 5.50% in March 2026

12 May 2026: Paige Estritori

As of March 2026, Australian savers are witnessing the highest interest rates on savings accounts in over a year, with rates reaching up to 5.50%. This increase is largely driven by recent cash rate hikes implemented by the Reserve Bank of Australia (RBA). - read more

MG HS Super Hybrid: Save $5,000 in EOFY Deal

04 May 2026: Paige Estritori

MG has announced a significant price reduction on its HS Super Hybrid range as part of its End of Financial Year (EOFY) M-Genius campaign. Until 30 June 2026, the HS Super Hybrid Excite is available for $42,990 driveaway, down from $47,990, and the Essence variant is priced at $46,990, reduced from $51,990. This $5,000 discount represents approximately a 10% saving on these plug-in hybrid SUVs. - read more

Click for more Finance News