Australia’s property market has reached an alarming milestone: the average price of a home has now exceeded A$1 million. This record-breaking figure not only highlights the ongoing Australian housing crisis, but also reflects broader global trends of housing inaccessibility in wealthy nations.
In the March quarter of 2025, the Australian Bureau of Statistics (ABS) reported that the average residential property was worth A$1,002,500, marking a 0.7% rise from the previous quarter. While such numbers signal economic activity, they also signify growing despair for Australians who find homeownership increasingly out of reach.
This blog unpacks the statistics, causes, and consequences of the Australian housing crisis and explores how Australia compares to countries like the UK and Canada.
Australian Housing Crisis by the Numbers: What the Data Shows
Australia is home to 11.3 million residential dwellings, encompassing everything from detached houses and terrace homes to apartments. The ABS reported that housing values increased across all states and territories in the first quarter of 2025, with the most notable surges in Western Australia, South Australia, and Queensland.
State-by-State Breakdown
- New South Wales (NSW): A$1.2 million average home price
- Victoria: A$1.05 million
- Queensland: A$945,000
- Western Australia: A$800,000
- South Australia: A$775,000
- Tasmania: A$710,000
- Northern Territory & ACT: Ranging from A$650,000 to A$850,000
NSW, being the most populous state, continues to lead with the highest housing prices, driven largely by demand in Sydney and surrounding metropolitan areas.
What’s Driving the Australian Housing Crisis?
Experts agree that the Australian housing crisis is not a new phenomenon. It’s the product of years of misaligned policy, population pressures, and market speculation. Here are the core drivers:
1. Chronic Undersupply
Australia has not built enough homes to keep up with population growth. Planning regulations, zoning restrictions, and bureaucratic delays have slowed down housing development in urban areas where demand is highest.
2. Population Growth
Post-pandemic immigration surges have placed additional pressure on the housing market. Cities like Melbourne, Brisbane, and Perth are experiencing population booms without the infrastructure or housing to match.
3. Tax Incentives for Investors
Schemes like negative gearing and capital gains tax concessions continue to encourage property speculation. Investors buying multiple properties outbid first-time homebuyers, further inflating prices.
4. Inadequate Social Housing
Australia has failed to maintain and expand its public housing stock. As a result, lower-income households are pushed into a private rental market with soaring rents and low availability.
5. Wage Growth Lagging Behind
While property values have surged, wage growth has stagnated, especially over the past decade. The income-to-house-price ratio has ballooned, leaving many Australians unable to afford even a modest home.
Emotional and Social Impact of the Australian Housing Crisis
Housing is not just an economic issue—it’s a deeply personal and emotional one. For many Australians, the idea of owning a home has been a cultural expectation, a marker of adulthood, and a source of security.
But as middle-income families also start getting priced out, the dream of homeownership is slipping away from more than just the working class.
Mental Health Impacts
Research shows that housing stress—defined as spending more than 30% of income on housing—correlates strongly with anxiety, depression, and family instability.
The Rise of “Generation Rent”
A growing demographic of young Australians no longer expects to own property. Instead, they are resigning themselves to lifelong renting, with fewer rights and less stability than homeowners.
How the Australian Housing Crisis Fuels Rental Market Struggles
While the spotlight is often on homeownership, the rental crisis is equally severe. Vacancy rates are at historic lows in cities like Sydney and Melbourne, and average rents have surged by over 10% year-on-year.
According to real estate data, Brisbane saw an 18% increase in rental prices over the past year alone. Landlords cite rising interest rates and maintenance costs, but the lack of rental supply remains the root problem.
How the Australian Housing Crisis Compares Globally
The Australian housing crisis is not unique. Other wealthy nations like Canada and the UK are facing similar challenges, but key differences shape their outcomes.
United Kingdom
- Average home price: £280,000 (approx. A$540,000)
- More council and social housing
- Stronger tenant protections
- Slower home price growth
Canada
- Average home price: A$763,000 (C$680,000)
- Similar tax incentives for investors
- Also grappling with supply shortages
- Immigration-driven demand pressures
Australia ranks among the least affordable housing markets globally, with Sydney and Melbourne frequently appearing in the top 10 cities with the worst housing affordability ratios.
Government Response to the Australian Housing Crisis and Its Political Impact
Prime Minister Anthony Albanese, recently re-elected for a second term, campaigned heavily on housing affordability. His government has pledged to build 1.2 million new homes in the next five years and reduce bureaucratic red tape for developers.
Measures Announced
- Fast-tracking housing developments on federal land
- Offering subsidies for build-to-rent projects
- Providing grants to state governments for social housing
- Streamlining planning approvals
However, critics argue that building new homes alone won’t solve the crisis without addressing the investor-favored tax system and protecting renters.
Policy Ideas to Combat the Australian Housing Crisis
Experts suggest a multi-pronged approach:
1. Reform Investor Tax Incentives
Curbing negative gearing and taxing capital gains at higher rates could disincentivize speculative investment and cool down the market.
2. Expand Social Housing
Reinstating a national social housing strategy and restoring funding to public housing bodies would provide relief to those most in need.
3. Support First-Time Buyers
Implementing shared equity schemes, low-deposit loans, or government-backed mortgages can help first-time homebuyers compete with investors.
4. Zoning and Planning Reforms
Allowing higher-density developments near transport hubs and employment centres could create more affordable options in desirable areas.
5. Renters’ Rights and Regulations
Introducing rent caps, banning no-cause evictions, and standardizing lease terms could make the rental market fairer and more secure.
The Private Sector’s Role in the Australian Housing Crisis
The construction and property development industry has an essential role in resolving the crisis. However, developers often cite local planning laws and inconsistent regulations as barriers.
Some are now pivoting toward build-to-rent models, where they retain ownership of properties and offer long-term leases. These can provide more stability for renters but must be regulated to ensure affordability.
The Future of Housing Amid the Australian Housing Crisis
The road ahead for solving the Australian housing crisis is complex. It requires coordination across all levels of government, private developers, financial institutions, and community organizations.
Urban vs Rural Trends
While major cities struggle with affordability, regional areas have also seen price surges due to remote work and lifestyle migration during the pandemic. Policies must reflect these shifting dynamic
There’s a growing movement for green, modular, and energy-efficient housing that reduces costs over time. Governments are incentivizing sustainable builds, but uptake remains slow.
Making the Australian Housing Crisis a National Priority
The fact that the average Australian home price has exceeded A$1 million is a stark reminder of the urgent need for reform. This isn’t just an issue of affordability—it’s about equity, social stability, and the future of Australian society.
Without immediate action, Australia risks becoming a nation where only the wealthy can own homes, and the rest are left in a precarious rental market. Tackling the housing crisis must be a top national priority—not just for the government, but for all Australians.
