Australian homes are facing six-figure price hikes amid a housing shortage
Forecasting that Australia will lose more than 460,000 homes in a housing crisis that has destroyed the target of 1.2 million new homes, a new report has revealed a six-figure increase.
Australia’s big dream home is facing a six-figure slump as the nation looks set to undermine housing development targets aimed at improving affordability.
Australian Property Market Outlook 2026-2030 released by independent consumer agency Propertybuyer today estimates that this will happen as the country is about 462,000 homes short of housing targets aimed at addressing the country’s housing crisis by significantly increasing housing supply.
Australia is working to build 1.2 million new homes by mid-2029 as part of the National Housing Accord, a program led by the federal government.
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However, construction approvals and completions data more than a year from the start of the program’s timeline show it is still well short of target, with only 193,000 permits in the most recent 12-month period covered by Australian Bureau of Statistics data.
A new report shows that over the next five years the continued shortage of new house construction will lead to house prices rising by almost 30 per cent in Brisbane, Adelaide, Perth and Darwin.
Housing prices include all homes, from apartments and units to townhouses.
That will see the average PropTrack value of the Queensland capital increase from $1.013m to $1.317m by the end of 2031.
In Adelaide there will be an increase of about $272,000 to $1.18m in the same time line.
Perth will see an extra $285,000 on top of the average house price of $950,000, while Darwin will gain about $173,000 to top $750,000.
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Propertybuyer chief executive and founder Rich Harvey says Australians will see house prices rise by six figures for major companies as they fall short of building targets.
In Sydney, the average $1.24m home could rise to $1.55m after a 25 per cent increase. Although the report shows that the average house price will rise significantly and exceed $2.22m.
Melbourne house prices are said to have gained just under $240,000 (28 per cent) from $854,000 to almost $1.93m. The Victorian capital’s median house price could be $1.4m by the end of 2030.
Propertybuyer founder Rich Harvey said the 25-30 per cent growth in capital cities would widen the divide between Aussie families who have and can hold on to property wealth, and those who don’t.
Noting the increase in first home buyers that coincided with the extension of the federal government’s home buying program by five per cent late last year, Mr Harvey said it was clear that people could see “the wave coming”.
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More than 460,000 homes short of new housing targets could have a significant cost impact on families hoping to secure the Australian Dream over the next five years.
“The only way buyers can enter these markets is through the wealth of production,” he said.
While that will mean homes continue to be unaffordable, he said the bank of mum and dad is likely to continue to help house prices rise – leaving those without that support less likely to own a home.
The solution for many would be to turn to medium density, look away from the big companies or become investors – which could increase the prices of affordable properties that are still available around the country.
“One answer is to live by reproduction, many people buy houses with the ability to make a granny flat so that they can move into it or their children can have it,” said Mr Harvey.
The buyer’s agent added that after taking data from the Australian Bureau of Statistics, the Reserve Bank, the Housing Industry Association and PropTrack, it is clear that less than 15 percent of the population in the two regions of the country, which is approximately equal to the average of 10,000 people, are in a position to reach their goals under the terms of the housing agreement.
Analysis of Mr. Harvey goes beyond the initial projections from the Building Council last year and estimates an even greater shortfall in the National Housing Agreement due to skills and lack of land that can be developed, planning delays, rising construction costs and risks of builders’ insolvency.
Population growth means that future generations are less likely to stay at home, unless they have family support.
“The lack of housing is now being addressed in the program,” he said.
“Displacement and housing developments continue ahead of new construction while capacity constraints slow development.
“Even if construction activity accelerates, the gap will not close quickly. This has a significant impact on purchases, rents and investment.”
The results will be reduced affordability, which will have some consequences for renters as population growth outstrips available homes – particularly in Brisbane, Perth and Adelaide where vacancy rates are very low.
However, this also makes the three cities the best bet for real estate investors who need to see the best conditions for potential growth in housing and residential values.
Sydney will see a big increase in the dollar, while Melbourne will need policy changes from the Victorian government to bring it in line with other states.
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