According to new data, Australia’s population continues to grow faster than new homes are being built, highlighting an ongoing gap between demand and supply.
The latest Australian Bureau of Statistics (ABS) figures show the national population grew by 1.5% in the 12 months to December 2025, increasing by 412,500 people to reach 27.8 million.
Australia needed to build more than 250,000 homes last year to keep pace with demand, according to the Housing Industry Association. Picture: Getty
The increase was driven by natural growth of 111,500 people, with births rising 3.6%, alongside net overseas migration of 301,000 people over the year.
Population growth in 2025 remained uneven across the states and territories.
Western Australia recorded the fastest annual growth at 2.2%, followed by Victoria (1.7%), Queensland (1.6%), the Northern Territory (1.5%), the ACT (1.3%), New South Wales (1.2%), South Australia (1.0%) and Tasmania (0.5%).
The latest population data comes as new home construction continues to lag demand.
The Housing Industry Association (HIA) estimates Australia needed to build more than 250,000 homes last year to keep pace with demand growth and begin reducing the existing housing shortfall. Instead, construction commenced on around 196,000 homes.
HIA chief economist Tim Reardon said the scale of the shortage was already evident across the housing market.
“Australia’s housing shortage should be viewed as trying to squeeze 11 million households into 10 million homes,” he said.
“Rising home prices, rising rents, elevated investor activity and a shortage of rental accommodation are all symptoms of a shortage of housing stock, not the cause of the shortage.
“On top of that existing shortage, additional demand for homes continues to exceed supply.”
Mr Reardon said demand for housing was influenced by multiple factors, including economic conditions and household formation, alongside population growth.
“With unemployment around 4.5% last year, Australia would need to build more than 100,000 homes per year, even without population growth,” he said.
The figures come as Australia works towards its housing supply target under the National Housing Accord, which aims to deliver 1.2 million new homes between July 2024 and mid‑2029.
Meeting that target would require the construction of around 240,000 new homes each year over the five‑year period.
In January 2026, the Centre for Population released its 2025 Population Statement, which found Australia’s population is expected to reach 31.5 million by 2035–36.
The statement also noted population growth is forecast to slow, easing to 1.3% in 2025–26 and 1.2% from 2026–27 onwards, below the 1.4% average recorded during the 2010s.
In April 2026, the National Housing and Affordability Council (NHAC) — the statutory body that advises the federal government on housing supply and affordability — forecast that 980,000 new homes would be delivered over the five‑year Housing Accord period.
At that pace, Australia would reach the 1.2 million‑home target by the September quarter of 2030, around one year later than the Accord’s June 2029 end date.
In its State of the Housing System 2026 report, the council noted the modelling was completed prior to the conflict in the Middle East and included two scenarios to account for potential impacts on construction costs.
Under the short‑term scenario, the council assumed construction costs would peak 6% higher in mid‑2026, resulting in 10,000 fewer homes built by mid‑2029.
The long‑term scenario assumed oil prices would take three years to return to pre‑conflict levels, with construction costs peaking 10% higher, resulting in 33,000 fewer homes delivered by mid‑2029.
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