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

Interest-Free Loans Launched to Aid Small Businesses During Fuel Crisis

15 Apr 2026: Paige Estritori

In response to the escalating fuel crisis impacting small businesses across Australia, the federal government has unveiled a $1 billion interest-free loan program. This initiative, part of the National Reconstruction Fund's economic resilience program, is designed to provide immediate financial relief to sectors heavily affected by rising fuel costs, including freight, fuel, and fertiliser businesses. - read more

Specialist Lenders Extend Support to SMEs Amid Fuel Price Surge

15 Apr 2026: Paige Estritori

As fuel prices continue to escalate, placing significant financial pressure on small and medium-sized enterprises (SMEs), specialist lenders such as Prospa and Judo Bank have stepped forward to offer tailored support solutions. These initiatives aim to assist businesses in managing cash flow challenges arising from increased operational costs. - read more

Government Accelerates $6.15 Billion in Business Support Amid Global Challenges

07 Apr 2026: Paige Estritori

The Australian government has announced the expedited release of $6.15 billion in concessional capital to support businesses grappling with global market disruptions. This initiative is part of the National Reconstruction Fund (NRF) and includes the Economic Resilience Program, the Net Zero Fund, and the Forestry Growth Fund. - read more

Australian Home Loan Sizes Hit Record Highs in 2026

30 Mar 2026: Paige Estritori

Recent data indicates that Australian home loan sizes have reached unprecedented levels. For owner-occupiers, the average loan size has climbed to a record $736,259, marking a 6.1% increase month-on-month and a 10.5% rise compared to the previous year. First home buyers are also borrowing more, with the average loan reaching $607,624, up 8.5% from the previous month and 11.8% year-on-year. - read more

Australian Credit Card Spending Sees Significant Increase

30 Mar 2026: Paige Estritori

In December 2025, Australian credit card purchases reached a total of $38.7 billion, marking a 5.1% increase compared to the same period in the previous year. The number of transactions grew by 2.0% to 323.7 million, with the average spend per card reaching $3,151. - read more

ASIC's Alert to Payday Lenders: Upholding Consumer Protection Standards

22 Mar 2026: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has recently issued a cautionary notice to payday lenders, highlighting potential breaches of consumer protection laws. This follows a comprehensive review indicating that certain lenders may not be adequately safeguarding borrowers, particularly those seeking small amount credit contracts. - read more

Rising Demand for Business Loans Among Australian SMEs

14 Mar 2026: Paige Estritori

The landscape of business financing in Australia is witnessing a notable shift, with small and medium-sized enterprises (SMEs) increasingly seeking substantial loans to fuel their growth ambitions. This rising demand is being met by non-bank lenders, who are offering more accessible and flexible funding solutions. - read more

Non-Bank Lenders' Rising Role in SME Financing

14 Mar 2026: Paige Estritori

In the evolving landscape of small and medium-sized enterprise (SME) financing in Australia, a significant shift is underway. Brokers are increasingly directing their clients towards non-bank lenders, especially for loans under $500,000. This trend underscores a growing preference for faster decision-making and streamlined application processes, which are often hallmarks of non-bank institutions. - read more

SME Lending Surge Opens New Avenues for Brokers

14 Mar 2026: Paige Estritori

Australia's small and medium-sized enterprises (SMEs) are experiencing a period of robust growth, leading to an increased demand for financing solutions. This surge presents a lucrative opportunity for brokers to expand their revenue streams by partnering with non-bank lenders. - read more

Click for more Finance News