Shortage And Population Pressure

Australia’s housing shortage is intensifying as construction lags well behind demand, reinforcing upward pressure on both prices and rents.

In the June quarter, just 46,000 dwellings were commenced and 41,432 completed, well short of the federal target equivalent to 240,000 new homes per year.

While material and labour costs have stabilised, elevated borrowing costs and thin builder margins continue to constrain new project starts, slowing the delivery pipeline at a time when additional supply is critical.

At the same time, population growth remains a powerful demand driver.

Net overseas migration reached about 350,000 in 2024–25, far above the long-run average of 240,000, with most arrivals being skilled workers and students who need housing immediately.

The combination of constrained construction and strong migration is tightening vacancy rates, supporting stronger rental yields and placing a premium on well-located existing stock.

For investors, it reinforces a clear strategy: focus on markets close to jobs, transport and lifestyle precincts, where structural demand is deepest and both capital growth and rental returns are most resilient.