Australia is facing a housing affordability crisis that shows no signs of easing. Despite ambitious government targets and policy interventions, the fundamental problem remains unchanged: we’re simply not building enough homes to meet demand. The consequences are playing out in real time across the property market, with prices continuing to climb and buyers facing increasingly competitive conditions.
The 1.2 Million Home Target: Already Falling Short
The federal government’s Housing Accord set an ambitious goal of building 1.2 million new homes between July 2024 and June 2029, which is roughly 240,000 homes per year. It’s a target designed to address Australia’s chronic housing shortage by flooding the market with new supply, theoretically easing price pressures and improving affordability.
The reality, however, tells a different story.
In the first year of the Housing Accord (2023–24), Australia built approximately 174,000 new homes, which is well below both the 20-year average of 190,000–200,000 homes and the 240,000 annual target. By September 2024, the five-year approval count stood at just 937,950, down from 949,469 in the previous five-year period.
Even more concerning is the gap between approvals and completions. Not every approved project proceeds to construction, meaning the actual number of homes delivered will be lower still. To hit the Accord’s targets, Australia would need to sustain building activity at or above historical record levels for five consecutive years – a feat the private sector appears unlikely to achieve alone.
Why the Building Pipeline Has Stalled
Several structural challenges are constraining housing supply. Building approvals fell 6.4% in October 2025, reversing gains made earlier in the year and highlighting the volatility in the construction sector.
Industry groups point to persistent labour shortages, ongoing builder insolvencies, planning delays, and infrastructure constraints as key bottlenecks. While the cost of building materials has stabilised and construction times have returned to pre-pandemic levels, these improvements haven’t been enough to trigger the sustained surge in building activity needed to close the supply gap.
There are, however, some encouraging signs. [Apartment approvals surged 26% in September 2025, reaching 7,219 dwellings and marking the highest level since December 2022. Higher-density housing is beginning to regain momentum as developers respond to tight rental markets and stabilising mortgage conditions. Yet even with this rebound, the broader pipeline remains well below what’s required to meaningfully address the shortage.
The Market Consequences: Rising Prices and Shrinking Stock
The supply shortfall is having predictable effects on the property market. Australia’s median property price increased for seven consecutive months through August 2025, driven by three key factors: interest rate cuts that boosted borrowing capacity, wages rising faster than inflation, and demand consistently outstripping supply.
By November 2025, the situation had intensified further. Total property listings fell 5.4% month-on-month and were 12.4% lower than the previous year, according to SQM Research. New listings dropped 11.3%, while older listings also declined sharply, which is evidence that active buyers are quickly absorbing whatever stock becomes available.
This tight supply environment is fundamentally reshaping market dynamics. Sellers now hold more negotiating power, well-priced homes are selling quickly, and asking prices continue to climb. For buyers, the combination of limited stock and sustained demand means increased competition and pressure to act decisively when opportunities arise.
What Needs to Change
The evidence suggests that relying solely on the private sector to solve Australia’s housing crisis is unrealistic. To achieve the Housing Accord’s targets, direct government intervention will likely be necessary, whether through public housing construction, infrastructure funding to unlock new development sites, or stronger incentives for private builders.
Without a significant shift in approach, Australia’s housing shortage will continue to worsen, keeping prices elevated and affordability out of reach for many Australians. The market has moved past its trough, but the recovery remains fragile and insufficient to meet the scale of the challenge.
What This Means for You
If you’re buying, pre-approval is more important than ever. With limited stock and active competition, being ready to move quickly gives you a genuine advantage. Understanding your true borrowing capacity also helps you avoid emotional bidding and focus on properties within your realistic price range.
If you’re selling, current conditions favour sellers, with strong demand and limited supply supporting higher prices. However, pricing your property correctly remains critical. Well-priced homes are selling quickly, while overpriced listings risk sitting on the market as buyers become more selective.
The housing affordability crisis won’t be solved overnight, but understanding the market forces at play can help you make smarter decisions, whether you’re buying, selling, or planning your next move. If you’d like to discuss your options or get pre-approved before competition intensifies further, contact Peel Finance Brokers. We’re here to help you navigate the current market with confidence.
Related posts:
- More Australians Are Building New Homes
- Shifting Market Conditions Give Buyers More Power in 2025
- How the Rise in Listings Is Helping Buyers Negotiate Better
Dip. of Management (Deacon University)
Dip. of Finance/Mortgage Broking Mgt.
Assoc. Cert. of Business (Real Estate)
Assoc. of Mort. Ind. Assoc. of Aust. (AMIAA)
Terry Boag is the founder and CEO of Peel Finance Brokers and has been providing professional and loyal service to the Mandurah and southwest area for 25 years. With a long history of financial experience, Terry is reliable and dedicated to his clients, always ensuring the highest customer service and delivering strong lender relationships.