Published 24 July 2026
New household formation in Australia is projected to exceed net new housing supply by 24,000 dwellings in 2025–26, down from a 78,000-dwelling gap two years earlier, according to the National Housing Supply and Affordability Council (NHSAC).
Population growth is the largest demographic driver: Australia added 412,494 people (+1.51%) in the year to December 2025, reaching 27,801,023. Net overseas migration contributed 300,955 of that growth, around 73%, with natural increase adding a further 111,539.
Household formation has also slowed: NHSAC estimates new underlying demand at 182,000 households in 2025–26, while the average number of adults per household rose to 2.10 in 2024–25. NHSAC projects the shortfall will become a surplus by 2027–28.
Is Australia on track to build 1.2 million homes by June 2029?Australia has completed 307,635 homes in the first seven quarters of the National Housing Accord, leaving the country 112,365 homes behind the pace needed to reach 1.2 million by June 2029. Australia…
Why is Australia falling short of its housing target?Australia is behind the pace needed to meet its 1.2 million-home target. By the March 2026 quarter, 308,000 homes had been completed, equal to about 26% of the National Housing Accord goal. To reach t…Section 01 · THE FRAMEWORK
The core drivers of housing demand in Australia
Four demographic drivers shape how many homes Australia needs. The first is population growth: Australia added 412,494 people (+1.51%) in the year to December 2025.
The other three drivers are:
- the age profile of that growth
- how many people live in each household
- where growth is concentrated
Economic conditions then determine how much of that underlying need shows up as buying or renting activity.
The four demographic drivers of housing demand in Australia, 2024–25 The four demographic drivers of housing demand in Australia, 2024–25 The four demographic drivers of housing demand in Australia, 2024–25
Section 02 · THE GAP
Australia's housing demand still exceeds new housing supply
New underlying demand exceeded net new housing supply by 24,000 dwellings in 2025–26. That is a smaller shortfall than the 78,000-dwelling gap recorded in 2023–24.
NHSAC expects the gap to close further and turn into a modest surplus from 2027–28 onward, as supply continues to ramp up and demand growth settles near its long-run pace.
This gap compares new household formation against net new housing supply, not population against dwelling completions. NHSAC calculates the figure by combining population forecasts with how likely people of different ages are to form their own households. It then compares the result against net additions to the housing stock, which already account for demolitions.
This outlook was prepared before the escalation of the conflict in the Middle East. The 2026–27 Federal Budget notes the conflict has added to construction costs, including a roughly 30% rise in some plumbing material prices linked to higher PVC costs, and forecasts dwelling investment growth easing from 5% in 2025–26 to 3.5% in 2027–28 partly as a result. NHSAC's own report estimates gross new housing supply over the Accord period could be 10,000 dwellings lower under a shorter disruption scenario, or 33,000 lower under a more prolonged one. NHSAC has not published a revised demand estimate or supply-demand balance for either scenario. The disruption is therefore presented as a current supply-side risk to the outlook above, rather than a demand-side factor.
Section 03 · BUILDING ACTIVITY
How many dwellings is Australia building, and where?
In the year to March 2026, 197,456 dwellings were commenced and 173,526 were completed nationally. Commencements and completions are different flow measures covering different dwelling cohorts, so the difference between the two totals is not a measure of dwellings sitting in the pipeline.
The separately reported pipeline measure was higher again: 243,864 dwellings were under construction at March 2026. The completions figure lines up reasonably well with a separate modelled estimate of 179,000 gross new dwellings for 2025–26, even though the two use slightly different reference periods.
The separately reported pipeline measure was higher again: 243,864 dwellings were under construction at March 2026. The completions figure lines up reasonably well with a separate modelled estimate of 179,000 gross new dwellings for 2025–26, even though the two use slightly different reference periods.
Of the dwellings commenced:
- 113,337 were houses
- 83,280 were classed as other residential (townhouses, units and apartments)
The remainder fall into smaller building categories not itemised here.
Section 04 · HOUSEHOLD FORMATION
How many new households form in Australia each year?
New underlying demand is estimated at 182,000 households in 2025–26, down by about 22% from 233,000 in 2023–24 as population growth moderates towards its pre-pandemic pace.
From 2026–27 onward, new household formation is expected to settle at around 172,000 to 180,000 a year through to 2029–30. The annual figure remains sensitive to migration, the population's age structure, and how households form.
A separate, longer-running household projection points to a similar near-term trend. It is based on 2021 Census data showing how likely people of each age are to live alone, with a partner, with parents or in a group household.
Under Series II living-arrangement assumptions and a medium population projection, it projects the number of Australian households to rise from 10,622,921 in 2025 to 10,787,602 in 2026, an implied increase of about 164,700.
That is broadly consistent with, though not identical to, the 182,000 estimate above. The two draw on different demographic vintages and incorporate migration outcomes from different points in time.
- HOUSEHOLDS, 2021
- 9.99M
- HOUSEHOLDS, 2046
- 13.9M
- INCREASE, 2021–46
- +3,710,761
Source · ABS: Household and Family Projections, 2021 to 2046 · from www.abs.gov.au
Section 05 · MIGRATION
How much of Australia's population growth comes from migration?
Net overseas migration added 300,955 people to Australia's population in the year to December 2025, around 73% of total population growth.
For the 2024–25 financial year:
- 568,370 migrant arrivals were recorded
- 262,800 departures were recorded
- net overseas migration was 305,570
- temporary student arrivals were the largest single group, at 156,710, including around 126,300 higher-education student arrivals.
Migration does not translate into dwelling demand on a one-for-one basis. Visa composition is likely to influence the timing and type of housing demand a migration intake generates, since students, working holiday makers, permanent visa holders and skilled temporary migrants differ in age, income and length of stay.
The ABS migration data does not measure household formation, tenure or accommodation type, so these housing effects cannot be quantified from the visa counts alone. The mix of visa types, not just the headline NOM figure, therefore provides context for how migration may flow into housing demand.
The 2026–27 Federal Budget, released in May 2026, revised the 2025–26 migration forecast up to 295,000, from 260,000 in the December 2025 Mid-Year Economic and Fiscal Outlook.
Treasury attributes this mainly to temporary visa holders departing at lower rates than previously assumed. It also notes a rise in New Zealand citizen arrivals, which it links to conditions in Australia's labour market.
| Financial year | Dec 2025 MYEFO | May 2026 Budget |
|---|---|---|
| 2024–25 | 310,000* | 305,000 |
| 2025–26 | 260,000 | 295,000 |
| 2026–27 | 225,000 | 245,000 |
| 2027–28 | n/a | 225,000 |
| 2028–29 / 2029–30 | n/a | 225,000 (both years) |
Source · Australian Government, MYEFO 2025–26 and Budget Paper No. 1, 2026–27, Table 2.2. NOM remains around 45% below its 2022–23 peak of 538,000.
Section 06 · MIGRANT COUNTRIES OF BIRTH
Which countries of birth contributed most to Australia's net overseas migration?
India was the leading country of birth by net overseas migration in 2024–25, adding a net 57,410 people, around 19% of the national total.
The next-largest net contributions came from:
- China: 35,160
- United Kingdom, Channel Islands and Isle of Man: 25,620
Together, the top five countries of birth accounted for just over half of Australia's total net overseas migration for the year.
This is a separate ABS classification from the visa and citizenship breakdown in the previous section. Country of birth records where a person was born, regardless of the visa they currently hold or citizenship they carry. The two tables are not directly comparable line by line, although both reconcile to the same total net overseas migration figure of 305,570.
Section 07 · HOUSEHOLD SIZE
How household size changes housing demand in Australia
Australia's average number of adults per household rose to 2.10 in 2024–25, up from 2.08 a year earlier, after dipping as low as 2.05 in 2021–22.
NHSAC attributes the recent increase to affordability pressure, reflected in two patterns:
- adult children staying in the family home for longer
- more people sharing homes or living with partners
Both patterns reduce the number of dwellings needed for a given adult population.
NHSAC treats adults per household, not average household size, as the key driver of dwelling demand. Children add to household size but do not form independent households, so a rising number of adults per household is a more direct signal that people are doubling up rather than moving out.
ABS, Household and Family Projections, Australia, 2021 to 2046, living arrangement propensities (reconciled 2021 Census figure). The equivalent share for 25–29 year olds rose from 12.9% in 2006 to 13.8% in 2021.
Section 08 · AGEING AND FERTILITY
How ageing and falling fertility affect housing demand in Australia
Australia's median age reached 38.4 years in 2024–25, up from 36.7 in 2005–06, and is projected to keep climbing to 43.7 by 2065–66.
The old-age dependency ratio, the number of people aged 65 and over per 100 people of working age (15–64), has risen from 19.3 in 2005–06 to 26.9 in 2024–25, an increase of about 40%. It is projected to reach 38.7 by 2065–66.
Fertility has fallen below replacement level: Australia's total fertility rate was 1.481 births per woman in 2024 (1.48 rounded to two decimal places), a new record low against a replacement rate of around 2.1.
This gap is one structural reason migration has become the largest source of population growth. Without migration, sustained below-replacement fertility would produce smaller birth cohorts and slower natural increase over time.
Section 09 · CAPITAL CITIES VS REGIONS
How population growth differs across Australian capital cities, regions and states
Capital cities grew by 1.76% in 2024–25, against 1.08% for regional Australia, and accounted for 67.9% of the national population.
Most of the net population gain from overseas migration was concentrated in capital cities, which added 258,117 people, compared with 46,662 in regional Australia. Through internal migration, capital cities recorded a net loss of 29,782 people to regional areas.
Overseas migration is a smaller share of growth in regional Australia than in the capitals. It was still the largest single component of regional growth in 2024–25, ahead of net internal migration (29,782) and natural increase (18,227).
Growth also varies between states. Western Australia recorded the fastest population growth of any state in 2024–25, with overseas migration accounting for most of that growth. New South Wales recorded the largest net outflow to other states. Queensland and Western Australia were the largest net beneficiaries of interstate migration.
| State / territory | Growth | Natural | Net interstate | Net overseas |
|---|---|---|---|---|
| WA | +2.2% | 14,890 | +10,288 | 41,057 |
| Vic | +1.8% | 36,516 | -777 | 87,159 |
| Qld | +1.8% | 20,606 | +21,595 | 55,673 |
| NT | +1.4% | 2,024 | -2,105 | 3,753 |
| ACT | +1.3% | 2,882 | -1,501 | 4,819 |
| NSW | +1.2% | 34,576 | -24,328 | 90,226 |
| SA | +1.1% | 2,727 | -1,295 | 19,069 |
| Tas | +0.3% | 350 | -1,877 | 3,023 |
Source · ABS, Regional Population, 2024–25, Table 10. Preliminary June 2025 estimates.
Section 10 · SINCE 2015
How population growth and migration have changed in Australia since 2015
Population growth was comparatively steady in the second half of the 2010s, running between 1.46% and 1.67% a year.
Border closures then cut net overseas migration to close to zero in 2020 and 2021. Migration and population growth rose to record levels after borders reopened: net overseas migration peaked at 530,620 in calendar 2023, and population growth reached 2.42% that year, the highest rate in the series shown.
By December 2025, growth had eased back to 1.51%, in line with the pre-pandemic pace of the late 2010s.
Population growth in Australia by phase, 2015 to 2026
Four broad phases in the data.
2015–19
Steady growth of 1.46–1.67% a year, migration a consistent contributor.
2020–21
Border closures cut NOM to near zero; population growth falls to 0.43–0.56%.
2022–23
Post-reopening rise: NOM reaches a peak of 530,620 in 2023, growth reaches 2.42%.
2024–26
NOM falls to 300,955 in the year to December 2025; NHSAC's supply-demand shortfall narrows to 24,000 dwellings in 2025–26.
Source · ABS, National, state and territory population, December 2025.
The narrower annual gap does not undo the shortfall accumulated during the 2022–24 period of high migration. A smaller annual gap adds to, rather than reverses, that earlier shortfall.
References
- ABS, National, state and territory population (latest release) · Australian Bureau of Statistics
- ABS: Regional Population, 2024–25 · Australian Bureau of Statistics
- ABS: Overseas Migration, 2024–25 · Australian Bureau of Statistics
- ABS: Births, Australia, 2024 · Australian Bureau of Statistics
- ABS, Building Activity, Australia (latest release, Cat. 8752.0) · Australian Bureau of Statistics
- ABS: Household and Family Projections, 2021 to 2046 · Australian Bureau of Statistics
- NHSAC State of the Housing System 2026 · nhsac.gov.au
- Centre for Population, 2025 Population Statement · population.gov.au
- Australian Government: MYEFO 2025–26 · budget.gov.au
- Australian Government: Budget Paper No. 1, 2026–27 · budget.gov.au
