Australia's housing shortage risks becoming a generational problem

The Federal Government’s latest Intergenerational Report provides a sobering analysis of home ownership and access to housing for young Australians.

According to the 2026 report, home ownership rates among Australians aged 25 to 34 have fallen by 17 per cent over the past four decades. It estimates that 250,000 fewer young households now own their own home than would have been the case had ownership rates remained at historical levels.

At the same time, growth in new housing supply has slowed relative to demand, reversing the trend of the previous 25 years. Australia is now building about half as many homes each year as it was three decades ago.

These statistics point to a fundamental shift in the opportunities available to younger Australians in our current housing market.

For decades, home ownership has been part of the Australian aspiration and an important foundation for financial security. Yet younger Australians are increasingly locked out as housing costs rise faster than their capacity to save and enter the market.

The findings reinforce the need to deliver new homes faster and meet the targets set under the Federal Government’s National Housing Accord.

The Accord established an ambitious target of 1.2 million new homes nationwide over five years. While challenging, it reflects the scale of the supply response required to meet Australia’s housing needs.

But setting a target and delivering the homes ‘on the ground’ are two very different things. Despite a collaborative effort from industry and Federal and State Governments, Australia remains well behind the trajectory needed to achieve the Accord’s ambition.

Here in Western Australia, our strong economic performance has been underpinned by high population growth, low unemployment and continued demand for skilled workers. That growth is positive for our state in many ways but needs to be matched by the homes and infrastructure required to accommodate it.

WA’s housing shortfall

Against the state’s Accord target of 129,000 new homes by June 2029, WA has completed 37,312 dwellings in the seven quarters from September 2024 to March 2026, which is an average of 5,330 each quarter.

Meeting the target requires about 6,450 completions a quarter, yet WA has not reached that rate in any quarter and has accumulated a total shortfall of 7,838 new dwellings.

At the average delivery rate achieved since the Accord began, UDIA estimates WA would reach our target of 129,000 dwellings in the June quarter of 2030. When infrastructure constraints and developers’ future intentions are taken into consideration, delivery could slip back to 2031 or 2032.

High construction costs, interest rates, cost-of-living pressures and broader economic conditions all affect housing affordability. But addressing the fundamental imbalance between the homes we need and the homes we can deliver is critical to easing pressure on prices.

Encouragingly, the Intergenerational Report recognises the critical role of housing supply in improving affordability and access to home ownership.

Supply actions required

That is why UDIA WA has been working with all levels of government to achieve a more coordinated, long-term supply plan that maintains a strong pipeline of development-ready land in the right locations.

Greater Perth has substantial land zoned for future housing, but much of it remains constrained by a lack of enabling infrastructure and other barriers, including environmental constraints, that prevent homes being delivered.

Our recommendations, several of which have been implemented or are being considered, are focused on unlocking that supply. That includes governments needing to set firmer timeframes for referral agencies, and to reduce duplication between agencies.

Investment in enabling infrastructure, including water, power, transport and community facilities, also must be funded and sequenced ahead of housing demand.

We also need a housing system capable of delivering a much broader mix of homes, supported by practical planning rules and incentives that make medium and high-density projects financially viable in a broader range of locations.

Traditional detached housing, such as four-bedroom, two-bathroom single-storey homes, remains an important part of the housing mix, particularly for families, but Australia’s changing demographics mean we also need greater diversity in established suburbs and activity centres.

Apartments, townhouses and other forms of medium-density housing all have a role to play in meeting the needs of singles, couples, downsizers, families and older Australians.

UDIA recommends that governments audit new policies and charges for their impact on housing supply and affordability, remove unnecessary costs and regulation, and establish clear accountability for meeting housing targets.

Promoting home ownership

Western Australia has demonstrated what can be achieved when government and industry work constructively towards a shared objective. Reforms that remove barriers to housing delivery and support greater supply have been important steps forward, and this needs to continue.

The scale of the challenge identified in the report shows there is considerably more work ahead of us.

The National Housing Accord has put housing supply firmly on the national agenda and ultimately, the consequences of falling short will not be measured simply against a five-year target. They will be measured in the growing number of Australians who cannot find a suitable rental, families forced to compromise on where or how they live, and young people who see home ownership moving beyond their reach.

Housing policy and delivery span election cycles, levels of government and economic conditions, and that is precisely why Australia needs consistent policy, clear accountability and a long-term commitment to supply.

If we want future generations to have the same opportunity to secure a quality home, whether they choose to buy or rent, Australia must make housing delivery a sustained national priority.

The decisions we make now will determine whether the next generation has greater housing choice or even fewer options than the one before it.