Navigating Australia’s Housing Market:Trends, Challenges and Opportunities

Housing Approvals Increase, but Construction Remains a Challenge

Recent data from the Australian Bureau of Statistics (ABS) reveals a significant rise in housing approvals; however, until these approvals are successfully translated into finished projects, it is unclear whether this progress will significantly alleviate the existing housing shortage.

In January 2025, residential dwelling approvals surged to 16,580, reflecting a 6.3% increase from December. Over the preceding three months, approvals were 14% higher compared to the same period in the previous year, with detached housing approvals rising by 6.1% and multi-unit approvals experiencing a remarkable increase of 27.3%.

While these positive signs are welcome, industry commentators warn that high construction costs and ongoing limitations in land availability, investment and labour will slow the on-time realisation of these projects. Maurice Tapping, an economist with the Housing Industry Association (HIA), points to continuing shortfalls in housing supply despite these marginal increases in approvals. He stated, ‘Despite modest improvements in housing approvals, Australia continues to face a significant shortfall in housing supply’.

Rental Affordability Declining

The PropTrack Rental Affordability Index indicates a further deterioration in rental affordability over the past year. The data highlights that New South Wales has the highest rental costs, whereas Victoria remains the most affordable state for tenants.

Although the rental market exhibits signs of stabilisation—with an increasing number of properties becoming available across major capital cities—the growth in rental prices continues to outpace income growth. Key findings from the report include:

A median-income household in Australia ($116,000 per year) can afford only 36% of rental properties listed between July and December 2024. A household within the top 30% of earners ($177,000 per year) can afford 83% of available rental listings. According to Paul Ryan, Senior Economist at PropTrack, the growth rate of rental prices slowed in 2024 compared to 2023, and this trend is anticipated to persist into 2025.
Increase in Property Listings Across Key Cities, The property market has observed a modest increase in listings, providing buyers with enhanced options. According to SQM Research, total listings reached 429,325 in February, representing a 2.3% increase from January 2025 and a 4.1% rise compared to the same period last year.

City-specific listing trends include:

Sydney: +11.6%

Canberra: +8.3%

Melbourne: +5.5%

Adelaide: +4.8%

Brisbane: +1.5%

Hobart: +1.1%

Conversely, Perth (-0.9%) and Darwin (-1.6%) recorded declines in listings, indicating tighter market conditions in these regions.Louis Christopher, Managing Director at SQM Research, notes that while the data reflects robust selling activity, an increase in older listings in Sydney and Melbourne suggests that certain properties are taking longer to sell. He remarked, ‘In the future, it is likely we will record another rise in listings for the current month of March. Then, the listings market is likely to go into a bit of a hiatus for the April public holiday period and will remain subdued until after the Federal Election.’

Strategic Implications and Future Considerations

The Australian housing market continues to grapple with multifaceted challenges as rising approvals fail to translate into adequate construction activity due to persistent cost pressures and resource constraints. Rental affordability continues to be a key issue in spite of the looming indications of stabilisation in the rental market. Simultaneously, rising property listings provide relief for purchasers; however, unsold stock in major markets should be closely watched. With the Federal Election looming, housing affordability and supply shortages are set to be the top policy issues. There are demands for specific government interventions to deal with these structural problems. The effectiveness of these interventions will play a crucial role in determining the direction of Australia’s housing market and providing sustainable solutions to its chronic problems.

Expert Guidance

Equitywise Property Group ensures this is the case by directing property buyers and investors through the complicated terrain. Their experience informs clients on navigating market forces most effectively while constructing strategies that respond to personal budgetary aspirations. Through extensive care during the entire purchasing process, Equitywise supports investors in making informed decisions that further their own long-term goals of wealth generation.