In June 2024, AMP chief economist Shane Oliver presented the following chart estimating that Australia’s housing shortage was about to exceed 200,000 homes:
Oliver explained via Twitter (X) that “underlying demographic demand (driven by strong population growth) continues to run well ahead of new housing supply (constrained by capacity and cost issues, etc.), and is pushing the accumulated housing shortfall back up towards levels last seen prior to the unit building boom last decade”.
Record high-rise apartment construction from 2015 to 2020 gradually reduced the shortage. Then, it was all but eliminated by the dramatic decline in net overseas migration that was observed during the pandemic.
However, the record post-pandemic immigration boom drove Australia’s housing shortage back toward its prior peak.
Last month, Shane Oliver estimated that Australia’s housing shortage could be approaching 300,000 homes.
This week, the National Housing Supply & Affordability Council (NHSAC) released its 2025 State of the Housing System report, which forecasts that Australia’s housing shortage will worsen by 79,000 dwellings over the next five years.
Housing demand via population growth is forecast to exceed new housing supply every year over the forecast horizon.
NHSAC’s calculation of demand is based primarily on expected population growth, which is forecast to remain strong over the forecast horizon courtesy of strong net overseas migration.
Interestingly, NHSAC has provided sensitivity analysis showing the demand-supply balance under stronger and weaker population growth assumptions.
If population growth is 15% stronger than expected over the forecast horizon, then the housing shortage would increase to around 195,000, up 116,000 (147%) from the baseline forecast.
However, if population growth is 15% lower than the baseline forecast, then Australia will experience a surplus of around 40,000 homes after five years.
NHSAC’s report shows in black and white that the primary solution to Australia’s housing shortage is to cut net overseas migration to a level below the nation’s capacity to build housing and infrastructure.
Sadly, the federal government has taken the opposite approach and has accelerated immigration.
As a result, Australia’s housing crisis and rental shortage will inevitably worsen.
