Australia's Housing Crisis Set to Worsen Amid Land Supply Shortages
Australia's housing crisis is expected to intensify this year as the development sector grapples with a range of structural constraints. These include high construction costs, severe shortages of skilled labour, limited supplies of development-ready land, and rising development holding costs. The current state of the housing market has been detailed in the Urban Development Institute of Australia's (UDIA) State of the Land 2026 report, released in March. This report serves as the most comprehensive annual assessment of residential development activity across Australia's major capital cities.
Significant Shortfall in Housing Supply Forecast
The latest State of the Land findings indicate that new house and multi-unit supply across the major cities will remain substantially below the levels required to meet targets set under the Federal Government's National Housing Accord. The research outlines a likely shortfall of 380,000 homes over the next five years. The outlook for the apartment and multi-unit sector remains particularly concerning, with another year of subdued activity expected to continue dragging on overall housing supply for at least the next three years. Concurrently, new dwelling production is projected to fall by an additional 11 per cent in 2026, placing continued upward pressure on both house prices and rents.
Western Australia Faces Critical Housing Deficit
In Western Australia, forecasts for Greater Perth suggest that approximately 80,000 new homes will be delivered over the next five years. This figure is around 25,000 dwellings short of the National Housing Accord target. This shortfall underscores the scale of the challenge ahead and highlights the urgent need for coordinated action. While recent initiatives by the State Government, such as the expansion of the off-the-plan stamp duty concession, are welcome, further direct measures are necessary to unlock adequate supply at scale.
Infrastructure Investment Key to Unlocking Land Supply
One of the most significant barriers to delivering development-ready land to the market remains the provision of enabling infrastructure. Without timely investment in essential services like water, power, and transport, new housing developments cannot proceed at the required pace. Consequently, UDIA WA has called for targeted infrastructure funding in its 2026-27 Pre-Budget Submission. This includes a $100 million allocation to Water Corporation to support critical capital works and a further $300 million to expand the Housing Enabling Infrastructure Fund. These investments are deemed essential to unlock land supply and accelerate housing delivery in key growth areas.
Revitalising the Apartment Sector Requires Support
Additionally, targeted support for medium and high-density housing will be critical to revitalising the apartment sector, which continues to lag behind. Measures such as expanding the Infrastructure Development Fund and introducing new financing mechanisms are necessary to address this issue. Addressing Western Australia's housing challenge will require sustained collaboration between government and industry. With the right policy settings and investment in enabling infrastructure, it is possible to improve supply and ensure more Western Australians have access to the homes they need.
