Australia’s residential housing market in 2025 continues to be defined by a widening gap between surging demand and limited supply. Population growth, driven largely by record levels of immigration, is putting immense pressure on the market. More than half a million new arrivals are expected this year, a figure that has rapidly outpaced the rate of new housing completions.
At the same time, recent interest rate cuts have reignited buyer confidence. Lower borrowing costs are allowing many to return to the market, with investors and upgraders competing strongly alongside first home buyers. According to recent data, the total value of dwellings nationally increased by more than $200 billion in the June quarter alone, bringing the figure to over $11.5 trillion.
Yet despite this buoyancy, the underlying problem remains a lack of supply. Builders continue to grapple with elevated material costs, labour shortages and lengthy approval processes, making it difficult to bring new homes to market at the pace required. This shortage has created a competitive environment in which buyers are bidding up prices, while renters are struggling with low vacancy rates and affordability pressures.
Forecasts suggest major capitals such as Melbourne and Perth will see median house price gains exceeding six figures this year, underscoring the strength of the market. However, without significant reform to planning systems, land release programs and construction bottlenecks, the housing shortfall is expected to deepen. The outlook is one of ongoing growth, but also ongoing challenges, as Australia’s housing market struggles to balance extraordinary demand with a system still unable to deliver enough homes.