Australia’s housing market continues to operate under severe listing shortages, with only around 128,000 properties currently available for sale—still sitting 18% below an already reduced five-year average.

This chronic undersupply is reshaping buyer behaviour, seller decision-making and price trajectories across the country. In many family-oriented and popular lifestyle suburbs, particularly within Sydney, Melbourne, Brisbane and Perth, the lack of available stock means buyers have little genuine choice. High-quality homes are attracting multiple offers within days, often with emotionally driven price competition.

Auction clearance rates have cooled from the high-70% levels earlier in the year but remain in the mid-60% range—still strong given the economic environment. Daily price growth has eased slightly in Sydney and Melbourne after the latest inflation updates, yet the broader trend remains unmistakably upward. Even when momentum softens, low stock levels ensure that the market retains a strong bias toward sellers.

The reasons behind the listing shortage extend far deeper than temporary caution. Many long-term owners are choosing to remain in place due to lifestyle inertia, uncertainty around future interest-rate paths and the comfort of low fixed-rate mortgages secured in recent years. Additionally, stamp duty, capital gains tax implications and other transaction costs discourage older homeowners from downsizing. This “locked-in” effect keeps turnover low and suppresses the supply of family homes—one of the most in-demand segments of the market.

For investors, this environment presents both opportunity and risk. On one hand, persistently low stock supports ongoing price appreciation and reinforces extremely tight rental markets. On the other hand, heightened competition increases the risk of overpaying—particularly for properties with compromised locations or weaker long-term fundamentals. The advantage lies in patience, discipline and a willingness to walk away from over-inflated campaigns.

Investors who focus on value fundamentals—such as land quality, school zones, transit access, rental scarcity and future infrastructure—will fare best. With quality listings so limited, success comes from recognising which assets will continue to outperform once supply eventually normalises.