AUSTRALIA’S housing shortage is already playing out, with population growth exceeding 400,000 people in 2025 while fewer than 200,000 homes were built, leaving supply well short of the more than 250,000 homes needed just to keep pace and begin reducing the deficit.
The imbalance is significant, with roughly 11 million households competing for 10 million homes, a gap that continues to place upward pressure on rents, lift house prices and intensify competition across both the rental and ownership markets. HIA Chief Economist Tim Reardon said,
“Australia needed to build more than 250,000 homes last year just to keep pace with demand growth … and yet we commenced less than 200,000 homes.”
While migration is often singled out, HIA argues the drivers of demand are broader and include a strong labour market, rising incomes and shifting living preferences, which lead to smaller household sizes, more household formation and expectations for greater space. Reardon warned that relying on simple population ratios is misleading, noting that “housing demand isn’t just derived from migration” and warning that this approach has contributed to decades of undersupply.
The underlying issue is poor coordination between federal migration settings, state infrastructure delivery and local planning systems, which limits the ability of housing supply to respond in a timely way. Without faster approvals, lower construction costs and more consistent building targets, supply is expected to continue lagging, with affordability pressures set to intensify in the years ahead.
