Australia’s housing shortage continues to worsen as the construction sector struggles to keep pace with surging demand.

Only 46,000 new dwellings were started and 41,432 completed in the June quarter — a rate far below the federal goal of 240,000 annually.

While building material costs and supply chains have stabilised, high interest rates and tight profit margins are limiting new projects. Many builders are cautious about launching developments without sufficient buyer pre-commitments, further slowing the flow of new homes.

Meanwhile, migration is adding significant pressure. Net overseas migration is forecast at around 350,000 for 2024–25 — well above the long-term average of 240,000. Most arrivals are skilled workers and students who need housing immediately, intensifying demand for both rentals and established properties.

This imbalance between supply and demand is keeping vacancy rates at historic lows and rents at record highs. For investors, the current landscape offers strong rental yields and long-term capital growth potential, especially in suburbs close to employment, transport, and lifestyle hubs. Policymakers face a mounting challenge: boost supply without destabilising an already strained industry.