Australia’s Housing Crisis Deepens: Are We Too Late to Fix It?

The gap between Australia’s housing demand and construction output is widening fast. The National Housing Accord’s target of building 1.2 million homes over five years is already behind schedule. In the September 2024 quarter, only 44,884 homes were completed - over 15,000 short of what’s needed to stay on track.

This shortfall varies by state. New South Wales missed its target by over 7,600 homes, and Queensland fell short by around 4,100. Victoria came closest, missing by just 14 homes. Meanwhile, Australia’s population surged by 552,000 in the year to June 2024 - most settling in metro areas already under housing pressure.

PropTrack reports we’re 62,000 homes behind in 2024 alone. With potential Trump tariffs set to raise construction costs, supply is likely to remain tight - driving up both prices and rents, especially in land-scarce, high-demand cities.

For property investors, this presents a clear opportunity. Quality rental homes in sought-after locations are more valuable than ever. But can we fix the housing supply gap - or is this the new normal?

Chapters

• 0:00 Australia's Ambitious Housing Target
• 1:32 State-by-State Building Performance
• 5:00 Construction Challenges & Trump Tariffs
• 6:22 Housing Shortfall vs Population Growth
• 8:00 Investment Implications & Closing Thoughts

Transcript

Speaker 1: 0:00

Welcome back to another episode of the Taylor Property Wealth Podcast. My name is Casey Taylor, I'm the host of the podcast and in today's episode we are talking about the Australian home building target. Is it on track to achieve the set amount that the government has put in place over the next five years, being 1.2 million homes? And it's been a pretty audacious goal to set because, based on these numbers, the government has never hit those numbers in the past and unfortunately it doesn't look like it's going to happen again. So we're going to get into that today and we know that that supply being added if there is an effect with that supply being added, that is lower supply whilst we've still got people coming into the country and that demand is still increasing. So our supply to demand is in a position where it's going to continue to push pressure, especially in those metro locations. So, as mentioned, the home building target is 1.2 million new homes under the National Housing Accords five-year plan, so it is a lot of homes every single year right to be able to achieve that. Historically we have never hit 240,000 homes per year. So it's great to set that goal, but the reality is can we actually make it happen? And unfortunately, it's looking like that might not be the case. So, according to the Australian Bureau of Statistics, builders completed only 44,884 homes in the September 2024 quarter, which is just over 15,000 fewer than the required pace, which is a massive, massive difference in terms of the home number. And then if we're looking at the average people who reside in that home, that is a lot of people who who don't have a home, which is going to cause pressure on that. That supply and demand. It's obviously going to. It's going to negatively impact affordability as well. Right, because it's going to continue to push prices up because of the competition there the high demand with the lower supply. So it's something that we need to factor into that. Some of the cities that do get the most population growth are Sydney, melbourne and Brisbane. Okay, so those areas are going to see a lot of that population. If we don't have the approvals keeping up with that, there's going to be pressure there as well.

Speaker 1: 2:44

All right, housing targets. So let's just have a quick look here at some of the different states, and some of this data is a bit lagged, so we can only go off that, however holistically. For the quarterly target nationally it was 60 000. The act. It's fallen behind homes only about 50 homes. So nothing, nothing crazy there. Northern territory they're behind, let's call it, 400 homes.

Speaker 1: 3:18

New south wales here's where some of the numbers are really off. So the the target for New South Wales was 18,822 and what was achieved was 11,220. So there's a massive difference there. Queensland again 12,287 homes and only 8,177 completed. South Australia they've fallen about 1,000 short was supposed to build 4,191 and built 3,104. Victoria it was probably the closest, so was meant to build 15,316 and it's only built 15,302. I shouldn't say only, it was very close. And then we have Western Australia 6,454 is what they were meant to do and, as per the September quarter for that one, 5,924. Tasmania fell short about 6,624. So, yeah, interesting to see, but unfortunately we are not keeping up with those targets that are set so holistically. For the September quarter it was like I said that 15,000 fewer homes, it's a big number. It's a big number number.

Speaker 1: 4:55

Now there's a few other things that are going to continue to negatively impact the construction as well and these targets being achieved. One of the new developments at the moment is the Trump tariffs and that going on. Is that going to negatively impact the cost of construction in our country. We obviously know that on the onset of COVID we had massive, massive spikes in materials which negatively affect the construction space. So is that going to continue? It's something that we need to factor in and consider because if we see that increase, it's going to affect that number for sure. So it's not going to get any easier. That's the reality of the situation and that's why we focus on established properties in established areas, because the scarcity of those over time is going to continue to get more and more scarce because of that.

Speaker 1: 5:58

Now recently PropTrack they've released their data on the housing supply shortfall. So there was actually 62,000 homes short in 2024, which is a massive number. And then, on the flip side of that, some of the growth into the country is extremely high and, like I said, it's going to put that pressure. So over the year ending June 2024, australia's population grew by 552,000 people. Now it was down from the year prior at 638,000, but still we have half a million people moving into the country, a lot of those people moving to the metro locations, and that is going to continue to put that pressure on the supply because of the high demand.

Speaker 1: 6:50

So if you're out there and you're thinking of whether to invest or not. Just this fundamental issue going on in the country is is something really important to make your decision on. And then, if you're going and overlapping everything else on top, you're getting in the right location at the right time, early in its growth cycle. You're doing your due diligence on that individual property. There is a lot of performance to be had because of this issue and if you're going out there providing that solution, providing providing those rental properties for tenants that desperately need it with the rental crisis we've got going on, you're going to be rewarded.

Speaker 1: 7:32

It's a pretty short, sweet one today, just going over those numbers. It's going to be interesting to see what numbers can be generated moving forward. What are your thoughts on this? Do you think we can achieve the target? Do you think we can catch up the 62,000 homes we're now behind on already to be able to meet that target over the five years? Or do you think we're set for failure already to be able to meet that target over the five years, or do you think we're set for failure? I'd be interested to know. I hope you've enjoyed this one and we'll see you on the next episode. Bye.