The National Housing Supply and Affordability Council’s annual State of the Housing System 2025 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.’
The Council’s second State of the Housing System report adds to the growing body of evidence about Australia’s housing system. It details Australia’s current housing demand, supply and affordability conditions, and the Council’s expectations for these over the coming years.
Poor housing affordability due to insufficient housing supply
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.
Ms 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 meaningfully improve housing affordability for all households. The Council forecasts that 938,000 new dwellings will be built in Australia over the Housing Accord period covering the 5 years ending 30 June 2029. This implies a shortfall of 262,000 dwellings relative to the 1.2 million Housing Accord target. No state or territory is forecast to meet the share of the target implied by its population.
After accounting for demolitions, the Council projects net new housing supply of 825,000 over the Housing Accord period, which is 79,000 dwellings fewer than expected new underlying demand.
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.
Affordability expected to stabilise but reforms needed for meaningful change
The report 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 5 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.
Within these 5 areas, the Council makes 15 policy recommendations. Actioning these recommendations will require effort and coordination right across the housing system.
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’.
‘The Council acknowledges the work underway across the housing spectrum, including work undertaken by states and territories to enhance planning systems. Our collective focus needs to remain on consistent and co‑ordinated effort’.
The Council’s report was informed by a range of information sources including the generous views and insights from stakeholders. These stakeholders include Commonwealth, state and territory government agencies; planning, residential construction and development peak bodies and entities; the community housing sector; stakeholders with expertise and experience in First Nations housing issues; research institutions and the academic community.
View the State of the Housing System 2025 report.