Australia’s Housing Challenge

Having achieved this target before in 2015, the National Housing Accord goal of 1.2 million new dwellings over five years, or 240,000 new dwellings per annum, appears achievable on the face of it. However, once we dig into the data and compare the market then and now, the challenges become clear.

In 2015, the market peaked at approximately 238,000 new dwelling building approvals, with an estimated purchaser mix of 118,000 owner occupiers, 84,000 local investors, and 36,000 overseas investors.

Fast forward to FY2025, and approvals have slipped to 186,000 dwellings, which is 54,000 short of the government’s target. The contribution from the owner-occupier segment is estimated to have increased slightly to account for around 119,000 approvals. However, the investor side has almost halved. Local investors are estimated to have accounted for just 51,000 approvals, and overseas investors only 11,700. The gap has partly been filled by nearly 4,000 build-to-rent (BTR) approvals, but this is still a modest share.

The Investor Shortfall

These numbers indicate that a larger contribution is needed from the investor side to meet the 240,000 target. However, this will be a challenge. Baby Boomers are moving to divestment mode and Gen X and Millennials are burdened by debt. Overseas investors have retreated in response to purchaser and owner surcharges, and are unlikely to fully recover.

Moreover, investors are the main ‘off-the-plan’ buyers for apartments, being more willing than owner occupiers to purchase an apartment sight-unseen. Without more investors, achieving the infill targets of our major capital cities will be impossible.

The Rise of Build-to-Rent

In the absence of enough local and overseas investor demand to support rental supply, the opportunity for institutional capital, in the form of ‘build-to-rent’ (BTR), has emerged to help fill the investor void.

In FY2025, just under 4,000 BTR dwellings were commenced, a relatively small contribution in the context of the 186,000 approvals for the year. However, BTR has the potential to scale significantly. Institutional investors, both local and international, are increasingly interested in residential property as a stable, long-term asset.

Even after allowing for higher levels of owner occupier and investor demand, BTR activity may have to increase up to tenfold, to around 30,000–40,000 dwellings annually, to compensate for the shortfall in traditional investor activity. Policy has become increasingly supportive, however, at this stage BTR development is largely taking place in the premium market, with developers avoiding ‘market priced’ and affordable developments without further incentives.

Closing the Gap

The path to 240,000 new dwellings a year is narrow. Owner-occupiers are already contributing significantly, and their upside is limited. That leaves two levers: re-engaging private investors and scaling up BTR. Without both, the target will remain aspirational rather than achievable.

Ultimately, hitting the government’s goal is not just about numbers, it is about balance. Australia needs a mix of housing types and tenure models that meet the needs of owners, renters, and the broader economy. Investors, whether small-scale landlords or institutional players in the BTR space, are critical to that mix.

At Quantify Strategic Insights, we help governments shape effective housing strategies, support developers in identifying opportunities, and guide investors in understanding risk and demand across the housing spectrum. With deep expertise and market-leading data, we are uniquely positioned to help stakeholders navigate the machinations of the Australian residential market.

For more information, contact Angie Zigomanis at [email protected] or Rob Burgess at [email protected]