Why Rising Prices Could Be the Key to Unlocking Australia’s Housing Shortage
By Leigh Martinuzzi | Martinuzzi Property Group – eXp Australia
This week, one article caught my eye because of its unusual claim: the only way to fix Australia’s housing crisis is if property prices rise. At first, that sounds completely backward. After all, rising prices are at the heart of our affordability struggles. But when you dig deeper into the numbers, the case begins to make sense.
Developers right now simply can’t make projects stack up. According to CBRE, Australia will complete just 52,500 new apartments in 2025 which is down from 64,000 last year and about 30,000 fewer than was forecast only two years ago. Construction costs jumped nearly 7% over the past year, land prices have surged, and most projects fall short of the 20% profit margin developers need to proceed. Unless prices rise, supply will remain scarce.
At the same time, demand is only getting stronger. Australia’s population is set to grow by over 2 million by 2030, with household incomes expected to rise from $110,000 to $140,000. That’s more people with more money chasing fewer homes.
Affordability and Buyer Demand
We’re already seeing pressure in the market. Vacancy rates are sitting at a painful 1.2%, rents keep climbing, and dwelling approvals fell another 8.2% in July. In September, vendor price expectations rose 2.6%, clearance rates in Sydney and Melbourne lifted, and prices across the capitals crept up another 0.2%. Confidence is slowly improving, but affordability remains a major hurdle.
For a median household, it now takes over eight years to save a 20% deposit which is up from six years in the early 2000s. A typical new home loan now consumes 54% of disposable income, the highest level in 20 years. While the government’s expanded Home Guarantee Scheme, lifting the cap to $1 million from October 1, will open more opportunities on the Sunshine Coast, it could also fuel demand in an already competitive market, especially for homes under $1 million.
Sunshine Coast Outlook
So, what does this mean for us here on the Sunshine Coast? The familiar story continues.
Stock levels are limited, time on market has stretched, and buyers are cautious. Many are waiting for more spring listings, which should bring fresh opportunities. For sellers, this is still a favourable environment, with rising price expectations and stronger buyer competition likely to create good results.
Another trend emerging is homeowners choosing to renovate rather than move. With higher transaction costs and limited trade-up options, many are staying put and improving their homes instead, further tightening supply for those looking to buy.
Looking ahead, spring and summer are shaping up to be busier as more sellers prepare to list. With confidence growing in Sydney and Melbourne, we could see a positive flow-on effect here on the Coast by the year’s end.
If you’d like help navigating the market, whether you’re buying, selling, or just planning ahead, feel free to reach out.
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