Australia is grappling with a severe housing affordability crisis, as highlighted by The Economist’s “Carrie Bradshaw index,” which illustrates the financial strain on individuals seeking to live alone. Over the past 25 years, house prices have doubled relative to incomes, making homeownership increasingly unattainable for average workers. The rental market is similarly strained, with high demand and limited supply exacerbating the situation.
In response, the Australian government has implemented measures such as a two-year ban on foreign investors purchasing existing homes, effective from April 1, 2025, to March 31, 2027, aiming to alleviate housing supply pressures.
Despite these efforts, projections indicate a significant shortfall in housing supply, with forecasts suggesting that Australia will miss its target of building 1.2 million new homes by 2029 by approximately 160,000 dwellings. This shortfall is attributed to factors including rapid population growth, rising construction costs, and labor shortages.
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Context & Background
Australia’s housing affordability crisis has been escalating over the past two decades, with house prices increasing at a rate that outpaces income growth. This trend has been driven by factors such as population growth, urbanization, and a strong investment culture in real estate. The rental market has also been affected, with low vacancy rates and rising rents placing additional pressure on individuals and families seeking affordable housing.
Government initiatives, including the recent ban on foreign investors purchasing existing homes, aim to address the supply-demand imbalance. However, challenges such as labor shortages, rising construction costs, and regulatory hurdles continue to impede the rapid expansion of housing supply. Analysts predict that without significant policy interventions and structural reforms, the housing crisis will persist, further impacting economic inequality and social cohesion in Australia.
In This Story
Anthony Albanese
Anthony Albanese is the Prime Minister of Australia and leader of the Australian Labor Party. He has been in office since May 2022, focusing on issues such as housing affordability, climate change, and economic reform.
National Housing Supply and Affordability Council
The National Housing Supply and Affordability Council is an advisory body established by the Australian government to provide independent advice on housing supply and affordability issues, aiming to inform policy decisions and address housing challenges.
Australian Bureau of Statistics (ABS)
The Australian Bureau of Statistics is the national statistical agency providing official statistics on a wide range of economic, social, population, and environmental matters of importance to Australia.
Reserve Bank of Australia (RBA)
The Reserve Bank of Australia is Australia’s central bank, responsible for monetary policy, issuing currency, and maintaining financial system stability.
Housing Australia Future Fund
The Housing Australia Future Fund is a government initiative aimed at investing in social and affordable housing projects to address the housing crisis and support vulnerable Australians.
