Australian housing supply and affordability crisis

Australia is experiencing a housing supply crisis characterized by rising construction costs and significant shortfalls in new dwellings. The National Housing Supply and Affordability Council projected that the government’s target to build 1.2 million new homes will be delayed from mid-2029 to the end of 2030. This delay is attributed to high interest rates and construction costs that remain 51 per cent higher than pre-pandemic levels, exacerbated by fuel and petrochemical price increases linked to Middle East conflicts.

Beyond general housing delays, specific shortages have emerged in the apartment sector. Major markets, including Sydney, Melbourne, Brisbane, Perth, Adelaide, and Canberra, face an estimated annual shortfall of between 13,000 and 21,000 dwellings. The crisis is driven by a lack of financial viability, insufficient presales, and limited builder availability. In response to these market conditions, institutional capital is shifting toward the residential property market, with private equity and property funds management firms increasingly targeting rental portfolios and residential development opportunities.