New arrivals to Australia have been the single biggest driver of the housing crisis, which has gone from bad to worse. The number of incoming people reached 110,000 in just one quarter (March 2025), almost twice as large as the pre-pandemic average. With migration now responsible for around 75% of population growth, the housing shortage is pushing up not only the rent and prices of homes but also the general costs of living.
The housing market remains under pressure despite the best efforts of the construction industry. In 2024, only about 168,000 new dwellings were started, indicating a significant shortfall against the federal goal of 1.2 million new homes by 2030. Currently, the prediction is that fewer than 1 million homes will be built by 2029, which means that the gap between demand and supply of housing will keep getting larger.
The economists caution that the difference will be the source of inflation in the housing market, which will negatively affect the budgets of households and will make the younger generation and migrants who want to move to new areas all economically disadvantaged. One of the consequences of the low vacancy rate, which is often below 1% in big cities, is the fierce competition for houses, which in turn puts more pressure on affordable living.
These numbers highlight a more significant economic problem: although migration contributes to the labor force and consumer demand, the delay in housing construction is the main driver of the increasing costs and the decrease in productivity. The range of housing shortfall is taking a heavy toll on Australia’s economy unless faster planning approvals, cheaper building costs, and more infrastructure investment are implemented, according to the analysts.
