Australia's housing market presents a difficult contradiction: policymakers want more affordable homes, while existing homeowners have a strong financial incentive for property values to keep rising. That tension sits at the heart of the country's housing crisis and complicates efforts to make homeownership more accessible.
Currently, home prices continue to outpace incomes, putting ownership further out of reach for first-time buyers. Some experts estimate it can take up to eight years' salary to save for a deposit.
Nationally, the median value of a home is north of $937,000, as of June 2026, according to research firm Cotality. In Sydney, Brisbane and Perth, median values have climbed into seven-figure territory. Nationwide, compared with a year ago, the return on house values jumped 7.3%,even as the country grapples with a persistent housing shortage that is intensifying competition.
Meanwhile, a handful of market players say they want more affordable housing. But they are hesitant to advocate for cheaper homes.
"The reason why our housing affordability problem will never be solved is because a very large majority of voters don't want it to be solved. And politicians know it," Saul Eslake, a Hobart-based economist, told Australian Broker.
The economist argued that the politics of housing make meaningful reform unlikely. Australia has an estimated 11 million to 12 million homeowners who vote, compared with roughly one million voters actively trying to break into the property market.
"Even the dumbest of politicians can do the math. And they do, in every election. Politicians know that so many people don't want house prices to fall," Eslake said. "That's why the government keeps coming up with things — as they did during the last election — to make housing more expensive."
Among the measures Eslake pointed out are the 5% deposit scheme, the Help to Buy shared equity scheme, stamp duty concessions and first-home buyer grants.
"Or for that matter, lower interest rates and easier lending criteria on the part of banks," he said. "Anything that allows Australians to spend more on housing than they'd be able to otherwise results in more expensive housing and a smaller proportion of the population owning it. If you give money to people to buy housing, all that will do is push up the price of housing because housing is in limited supply. That explains why governments keep doing things that make housing more expensive. Because the majority of voters want governments to do that.
"Take a look at the consumer price index (CPI)," Eslake added. "There are 87 different components in the CPI. If any of the first 86 of them were to fall, people would say, 'hooray, yeah, that's good.' But when it comes to housing, which is the biggest component of the cpi, somehow if that were to fall, people say, 'oh my God, the sky's falling in. The government has got to do something to stop it.'"
But some market participants say it's not as easy as simply lowering house prices.
"If house prices were to fall, it could potentially fix the affordability crisis. But what you're doing is wiping out trillions of dollars of value or hundreds of billions of dollars of value for all homeowners," said Ben Kingsley, founder and managing director of Melbourne-based Empower Wealth Advisory.
Kingsley acknowledged that homeowners outnumber renters at the ballot box. "But did those two-thirds of property owners sign up to have $100,000-plus of the value of the home disintegrate off the back of these policies?" he said.
A better approach, Kingsley argued, would be for the government to focus on cutting red tape, releasing more land and removing taxes and regulations that add to construction costs without affecting home values.
"The ultimate solution is that if the government can release more land, then they can, sort of, change housing density policies, and then become more efficient at building properties, modular construction, which can be built quicker," he said. "So you're reducing some of the costs. That's the debate that I think Australians should be having because crashing a market is not a smart way in terms of delivering tax reform or any type of legislative reform."
The housing shortage, meanwhile, shows little sign of easing, putting the Labor government's goal of delivering 1.2 million new homes by 2029 under increasing pressure. Even building approvals — an early indicator that does not guarantee projects will be completed — point to a sluggish pipeline. Total dwellings approved fell 1.1% in May. That's on top of declines in both March and April.
"We just need to build more houses," said Bernard Desmond, founder and chief executive officer at Melbourne-based Blank Financial. "Australia has more migration than houses being built, and hence, the demand is outstripping the supply.
"It's only going to get worse from here," he added. "It's not going to get better."
