Australia is not building enough new homes to meet current demand, according to the State of the Housing System 2025 report from the National Housing Supply and Affordability Council.
The report revealed just 177,000 new homes were completed in 2024, far short of the estimated demand of 223,000. This marks one of the lowest annual housing supply levels in a decade.
The report confirmed a downward revision to the five-year forecast, with only 938,000 homes expected to be built by June 2029 – down from the previously projected 943,000 homes. Based on this projection, Australia will fall 262,000 homes short of its 1.2 million target.
“The Australian housing system remains far from healthy and is continuing to experience immense pressure,” said Susan Lloyd-Hurwitz (pictured), council chair.
The report, which was also covered by PropTrack and Build Australia, warned that Australia is likely to miss its commitment under the National Housing Accord, which aims to deliver 1.2 million new, well-located homes between July 2024 and June 2029.
“The nation is still very much in the grips of a housing crisis that has been decades in the making through our persistent failure to deliver enough homes to meet demand,” Lloyd-Hurwitz said. “The human cost of this chronic unaffordability is unacceptably high.”
The industry leader said many households face “difficult trade-offs,” such as reducing spending on essentials or living further from work and family.
Despite the gap, the council stands by the 1.2 million home target, calling it “rightfully ambitious.”
“The target is rightfully ambitious, highlighting the magnitude of the community’s challenges; communicating government policy intentions; galvanising and focusing effort across governments, industry and the community sector; and facilitating transparency, accountability and performance assessment,” the report said.
The council noted that underlying demand is expected to be 904,000 homes during the five-year period, with 113,000 demolitions forecast, meaning at least 1.017 million new homes are needed just to meet demand.
With current supply projections falling short, the council stressed the need for urgent action.
In 2024, home loan repayments consumed 50% of median household income, while rents accounted for 33%. It now takes an average of 10.6 years to save for a deposit.
The council outlined five key policy areas that must be addressed to improve the system and meet targets:
“A significant uplift is needed to support Australians who depend on social and affordable housing for shelter and as a foundation for building their lives and participating in their communities,” Lloyd-Hurwitz said.
“Our collective focus needs to remain on consistent and coordinated effort.”
She said reform is vital to make housing affordable, fit for purpose and secure across all income levels and locations.
The Property Council of Australia echoed calls for reform, highlighting the burden of regulatory and tax costs on new home construction.
“The sad fact is that many Australians feel that homeownership is out of reach,” chief executive Mike Zorbas said. “More than 30% of the cost of a new home is government taxes and charges.”
He warned that poor planning systems and foreign investment taxes are stifling much-needed housing investment, and urged federal and state governments to modernise approvals, expand skilled migration and stop utility delays to speed up housing delivery.
The NSW government responded to the report by highlighting its Transport-Oriented Development program, which aims to deliver 231,855 homes.
NSW Minister for Planning and Public Spaces Paul Scully acknowledged the challenges, citing high construction costs and economic pressure, but said progress was being made.
“Planning approvals are 15% faster today than they were in March 2023, the number of applications lodged is up 28% on the same time last year, and NSW has the most homes under construction in the country,” Scully said.
“There are thousands more homes and DAs being finalised that are embracing our planning reforms such as the Housing Delivery Authority and the Low and Mid-Rise policy. We’re building a pipeline that will actually deliver homes.
“The ‘State of the Housing System’ report shows us that we have our work cut out for us, but as a government we’ve got our priorities right.”
The council forecasts that housing affordability may stabilise over the next few years, with a slowdown in price and rent growth, and signs that construction costs have levelled out. Demand is also expected to stabilise at around 175,000 households per year from 2025–26.
While government and private investment are accelerating the supply of social and affordable housing, the report stresses that only continued systemic reform, support measures and innovation will bring lasting improvements.
For more information, read the "State of the Housing System" report. For more information, see the PropTrack and Build Australia articles.
