Australia’s attempts to build it’s way out of the housing crisis have taken another step backwards, with home building completions sinking to levels similar to 30 years ago – when the country had 10 million fewer people.
Analysis of ABS building completions data over the year to December 2025 showed just 172,246 dwellings were finished, the lowest amount in 12 years and only marginally above completion levels in the mid-1990s.
MORE: Investors to pay $65k a year in tax bombshell
Home building completions hit a 12-year low in 2025.
MORE: Jackie O’s cunning $30m exit plan amid Kyle split
Australia completed about 170,000 homes in 1994 and about 166,000 in 1993 – a time when the population was about 17.8 million, well below the current estimate of 27.6 million.
The volume of new builds in 2025 increased the country’s total housing supply by 0.04 per cent, according to the Money.com.au and Primara Research analysis of ABS dwelling approvals, which described this as “barely” an increase.
It was the second year in a row that the country missed its annual target of 240,000 new dwellings, set as part of the National Housing Accord commitment to building 1.2 million homes by mid-2029.
Primara head of research Peter Drennan said the national figure “looks bad” but there were differences across states.
Victoria had a particularly sharp contraction in completions after being the engine room for new housing supply in previous years, he said.
MORE: Sneaky way Albo is now killing your savings
Century21 chairman Charles Tarbey said successive governments had failed to do enough to stimulate housing supply.
MORE: How David Jones signed its own death warrant
“Victoria’s 10 per cent decline (in completions) is dragging the country backwards, and with 31 per cent of all national completions, it has the weight to do it single-handedly,” Mr Drennan said.
Tasmania and the ACT had the biggest falls in percentage terms, with completions dropping by 18.4 per cent and 15.7 per cent, respectively – albeit from a much lower base than in Victoria.
Mr Drennan added that other major states were building more but struggling to “keep pace with their own popularity”.
“Queensland and WA are building more than they were but they still can’t keep up with the people arriving,” he said. “One problem is about slowing down, the other is about not being fast enough.”
Last year’s lower completions were particularly alarming when compared to figures reported in the 2010s, when Australia’s population was smaller.
MORE: ALP ‘promise’ in ‘tatters’ amid migration bombshell
Victoria was the engine room of home building in Australia, but it’s now building fewer homes.
The 172,000 tally of homes completed last year was below the number completed in 2014.
Population growth through migration last year was markedly higher than in 2014 – the ABS reported net overseas migration into Australia was 311,000 in 2025, compared to about 182,000 12 years ago.
Mr Brennan said building completions fell last year due to a combination of rising building costs and a shift to more apartment construction, which took longer to complete.
These trends were especially noticeable in Canberra, he said.
“Build costs in the ACT have risen close to $190,000 in three years, and the market is responding exactly as you’d expect,” Mr Brennan said.
“Houses are becoming a rarity in the ACT. Developers are shifting to apartments where returns per square metre make the numbers work. For buyers who want a house, scarcity is only going to increase.
“The shift to apartments means the pipeline is longer and completions take more time to flow through.”
Lower completions were attributed to more apartment projects, which took longer to be finished.
Housing Industry Association economist Tom Devitt explained in April that housing demand had been growing in some of the states where building completions were lower than in previous years.
“New South Wales, Victoria and the Northern Territory … are still seeing relatively weak volumes of new home building entering the pipeline,” Mr Devitt said.
“Nonetheless, underlying demand for housing in these jurisdictions is being supported by the continued inflow of overseas migrants.”
KPMG Urban Economist Terry Rawnsley said measures announced in May’s Federal Budget would not have a significant impact on supply.
“The Federal Budget included a range of measures that will influence housing supply through infrastructure investment and changes in investor behaviour,” he said.
“However, these measures are likely to have only a marginal impact. Housing supply will remain primarily determined by fundamentals such as construction costs and sale prices for new homes.”
MORE: Australia’s $85bn savings crisis exposed
Broke 39yo truckie paid off home in 10 years
‘$90 Bunnings gadget saved me from a $3m mistake’
The Albanese government, along with state governments, have committed to the National Housing Accord to build 1.2 million new homes by mid-2029. Picture: Josh Chadwick
Mr Rawnsley said it was encouraging that a recent backlog of approved, but uncommenced dwellings, was starting to reduce, but he added that housing supply remained tight, especially in Sydney.
“Sydney is the epicentre of the nation’s housing crisis and the most constrained market when it comes to residential construction,” he said.
“Clearing the backlog (of not yet commenced projects) is an important step, but sustained increases across the entire development pipeline will be essential if housing shortages are to be meaningfully addressed.”
REA Group economist Angus Moore said recent tax reforms included in the Budget, such as restricting negative gearing to new builds from 2027, may do little to stimulate new housing.
“Housing supply remains the fundamental challenge facing the housing market,” he said. “On this front, the Budget offers relatively limited new measures.”
Century21 chairman Charles Tarbey said the Budget changes had created a “hostile environment”.
“Successive governments have failed to catch up with the housing supply needed to support Australia’s growing population,” he said.
“Investment in property is no different to investing in a business. Income versus expense leaves either a profit or a loss, yet property investors continue to be treated differently.
“Government needs to stop promising housing outcomes it cannot deliver and instead incentivise free enterprise to get supply back on track.”
English (US) · 