The National Housing Supply and Affordability Council’s State of the Housing System 2025 report forecasts Australia will build 938,000 homes until June 2029, down from the 943,000 homes previously forecast and short of the 1.2 million target.
Property Council of Australia Chief Executive Mike Zorbas said the report shows the need to increase productivity in the construction sector, simplify planning systems and encourage investment.
“The sad fact is that many Australians feel that homeownership is out of reach,” he said.
In December 2024, 50 per cent of median household income was needed to meet repayments for new mortgages, while 33 per cent of median household income was needed to meet rental costs for new leases.
For aspiring home owners, the average number of years required to save for a deposit rose to 10.6 years.
Chair of the Council, Susan Lloyd‑Hurwitz said: “The human cost of this chronic unaffordability is unacceptably high.
“Many households have to make difficult trade‑offs in the face of rising housing costs, including by reducing spending on other essential household items, living further away from places of employment, education and family networks, or living in inappropriate housing.”
The supply of new housing is near its lowest level in a decade. 177,000 new dwellings were completed in 2024, falling significantly short of underlying demand for housing which was estimated at 223,000 for the same period.
The Council’s analysis shows that expected new housing supply will be insufficient to improve housing affordability for all households.
Housing affordability deteriorates
The report shows housing affordability continued to deteriorate in 2024, with worsening trends across most capital cities and regional areas.
Housing prices and rents increased to record‑high levels, as new housing supply continued to fall short of demand. Labour shortages, high material costs and elevated interest rates have reduced project feasibility, limiting new housing supply.
Chair of the Council, Susan Lloyd‑Hurwitz, said systemic reform and ongoing investment from government and industry are urgently needed to ensure that housing in Australia is affordable, fit for purpose and secure for households of all incomes and in all locations.
“The Australian housing system remains far from healthy and is continuing to experience immense pressure,” Ms Lloyd‑Hurwitz said.
“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.
For many Australians right across the country, the ability to access an affordable, fit for purpose and secure home remains a challenge, if not out of reach entirely, and is a source of significant stress.”
Labour shortages, high material costs and financing costs are expected to continue weighing on new supply, though these constraints are easing.
There continues to be an inadequate pipeline of skilled workers, low rates of productivity and innovation in the construction sector, and restrictive and complex land use and planning approval systems in some jurisdictions.
Zorbas said while the federal and state governments are coordinating their efforts on boosting supply, more must be done.
“Our skills and planning systems are not yet match fit for this century.
“More than 30 per cent of the cost of a new home is government taxes and charges.
“East coast states have daft foreign investment taxes that are barbed wire to overseas institutions that want to send their money to help Australian companies build the assets our cities need.
“The least cost answer for indebted states is to modernise our planning systems and put measures in place to boost the proportion of skilled workers coming into the country.
“We need to bring forward federal environmental approvals and force power and water providers to stop delaying the delivery of new homes, industrial and commercial assets that our communities need as they grow,” he said.
Affordability expected to stabilise but reforms needed for meaningful change
The Council signals slight improvement in some parts of the housing system. Over the next few years, the Council forecasts that housing affordability will broadly stabilise, and in some cases improve a little.
New demand for housing is moderating, and is expected to stabilise at around 175,000 households per year from 2025–26. Supply is expected to gradually rise from current low levels.
The rate of growth in housing prices and advertised rents is slowing and construction costs have stabilised.
Additionally, the supply of social and affordable housing is accelerating, reflecting an increase in government investment and initiatives that encourage private sector investment.
However, the report says significant system‑wide reform, government support measures and industry innovation are all needed to materially improve the housing system.
The report sets out five key policy areas that require focus: increasing social and affordable housing, improving construction capacity and productivity, reforming planning systems, providing further support for renters and ensuring Australia’s taxation system supports housing supply and affordability.
Ms Lloyd‑Hurwitz said: 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.”
