Shane Oliver: Australia’s Housing Shortage to Persist

Key Takeaways

• NHSAC projects 219,000 homes built in 2029‑30.
• Forecast marks near‑historical peak in Australian dwelling construction.
• Projection up significantly from previous year’s estimates.
• Critics label the forecast “delusional” amid ongoing shortage.
• Housing deficit likely to continue despite predicted construction boom.

Pulse Analysis

Australia’s housing market has been strained for years by a combination of rapid population growth, limited land release and tight credit conditions. Between 2020 and 2025, net migration added roughly 1.2 million people, pushing demand for new dwellings beyond the capacity of existing supply chains. As a result, median house prices have risen more than 30 percent in major cities, squeezing first‑time buyers and widening the affordability gap. The chronic undersupply has prompted federal and state governments to pledge increased construction targets, yet progress remains uneven.

The National Housing Supply and Affordability Council’s 2026 State of the Housing System report dramatically revises those targets upward. It now projects 219,000 new homes will be completed in the 2029‑30 financial year, a level close to the historical peak of 224,000 achieved in 2016‑17. This represents a 45 percent jump from the council’s 2025 forecast of 151,000 units. However, chief economist Leith van Onselen dismissed the outlook as “utterly delusional,” arguing that labour shortages, material cost volatility and planning bottlenecks make such a surge unlikely.

If the council’s optimistic numbers prove unrealistic, the housing deficit will likely linger, keeping price pressures high and limiting the ability of renters to transition to homeownership. Construction firms may still benefit from short‑term demand spikes, but investors should be wary of over‑reliance on policy‑driven supply forecasts. Policymakers, meanwhile, must address structural constraints—such as zoning reform, workforce training and supply‑chain resilience—to translate any increase in approvals into actual deliveries. A more measured outlook could guide targeted subsidies and tax incentives that better align with genuine market capacity.