Grim prediction: Aus short 400,000 homes by 2029

The Australian housing crisis is set to worsen with a new report predicting a 400,000-dwelling shortfall across the capital cities by 2029.

UDIA is predicting a new home shortfall of almost 400,000. Picture: Shae Beplate.

The Australian housing crisis is set to worsen with a new report predicting a 400,000-dwelling shortfall across the capital cities by 2029.

The State of the Land Report 2025 by Urban Development Institute of Australia (UDIA) predicted the Federal Government’s national target of 1.2m new homes by 2029 would fall short by 393,000 dwellings.

The report found 135,640 dwellings were completed in 2024 in the UDIA annual assessment of combined capital city new residential supply, reflecting a modest 2.4 per cent increase on 2023 completions.

This was driven by a 5 per cent increase in the delivery of detached houses across the nation’s greenfield release corridors and within existing urban areas.

Greater Perth lead the way with a 22 per cent annual increase in new dwellings in 2024, while Greater Melbourne was up 7 per cent and South East Queensland was up 1 per cent.

In the same time, dwelling completions fell 4 per cent in Greater Sydney, 6 per cent in Greater Adelaide and 16 per cent in ACT.

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New home supply is expected to drop by 11 per cent this year. Picture: Shae Beplate.

UDIA modelling forecasted all capital city markets, with the exception of Perth, would record reductions in completed new product supply in 2025 and further declines in the following year.

“There will be a 11 per cent drop in aggregate volumes of combined capital city new residential market supply delivered in 2025 to 120,660 aggregate completions, with multi-unit sector production weakness holding back improvements in greenfield sector delivery,” the report said.

“There will then be a further reduction in aggregate supply in 2026 to 116,700 dwellings followed by a modest recovery over the back end of the five year forecast period with 2029 expected to yield around 125,000 new homes.”

The report said annual greenfield lot sales improved by 25 per cent across the combined capital cities in 2024, registering 38,690 sales.

However this volume was 22 per cent lower than the decade annual average and 52 per cent below the peak of sales activity achieved in 2021.

The report said national greenfield activity remained weighed down by the “ongoing and extremely weak performance” of the Greater Melbourne land market.

The combined capitals median lot price grew 13 per cent in 2024 to $421,525, double the decade average annual price growth, driven by strong growth in the South East Queensland, Adelaide and Perth greenfield markets.

Col Dutton, UDIA National President. Picture: Supplied

The report found Australia’s net additions to the national dwelling stock had not kept pace with population growth, with a serious undersupply of new dwellings between 2007 and 2014 underpinning the current rental market crisis and broadbased erosion of national housing affordability.

UDIA National President, Col Dutton said since the release of last year’s State of the Land report, population growth had reduced, but the FY24 net national population growth of 552,000 was around double the long run average, underpinned by extremely high levels of immigration.

“This increased demand profile has coincided with a decline in aggregate housing production across most capital city markets, which is pushing dwelling prices northwards and placing enormous pressure on rental markets,” he said.

“Across the past two decades, Australia has significantly under delivered new dwelling supply across the nation.

“This undersupply has contributed to the ongoing erosion of housing affordability and has driven down homeownership rates and led to increasing household indebtedness.

“This is the reason Government needs to focus on boosting development-ready land supply if it is to have any hope of achieving its ambition to permanently ease housing affordability and improve the delivery of at market, affordable and social housing.”

Originally published as Grim prediction: Aus short 400,000 homes by 2029