Australia’s housing affordability crisis is expected to deteriorate further in 2026, with industry economists warning that planned reforms and stronger building approvals are still a long way from delivering relief for buyers and renters.
Over the 12 months to November, 193,299 new homes were approved, more than 20,000 higher than a year earlier and the strongest result in more than three years. Much of the improvement has come from higher-density housing, with apartment and unit approvals lifting across all states.
However, this is still well short of the 240,000 new builds a year needed to hit the National Housing Accord’s target of 1.2 million homes by July 2029 – and not all approvals will ever translate into completed dwellings, Herald Sun reported.
Housing Industry Association senior economist Tom Devitt (pictured) said the recent lift in multi‑unit approvals was being underpinned by rising prices for existing stock, but that it remained nowhere near enough to ease affordability pressures.
“The increase in established apartment values is making approvals more viable … which is definitely what we want to see, and what policy makers want to see,” Devitt said.
“But it’s still not going to get to the kind of numbers required for the Accord target. So at least for this year, housing affordability will continue to get worse.
“The next housing upswing is taking shape, but it will not reach its full potential unless policy settings support it.”
He noted that approvals are still “pretty soft” when viewed against long‑term averages and today’s much larger population, and that underbuilding over many years has left the market structurally short of homes.
The ABS data also shows the average value of a detached house approval has climbed to a record $519,906.
Oxford Economics senior economist Tim Hibberd said that was up 6.5% over the year, with even sharper gains in South Australia (16.4%) and Victoria (7.9%), adding further pressure to already stretched budgets.
Hibberd described housing as a “chunky” driver of Consumer Price Index movements. While he did not predict that higher build costs alone would trigger further rate hikes, he said there was little sign of meaningful easing in overall housing costs.
Devitt also cautioned that an interest-rate increase is now “definitely more likely than it was six months ago”, although the HIA is not expecting any move in the first half of 2026.
Oxford Economics expects Australia may not begin consistently reaching the Accord’s 240,000‑a‑year approvals mark until around mid‑2028. Even then, Hibberd said, households shouldn’t expect an immediate improvement in affordability.
Oxford Economics is anticipating that the nation might begin to reach 240,000 new approvals by mid‑2028, but even then are not anticipating any improvements to housing affordability until the end of the decade and probably after 2030.
“It’s just going to be a long journey,” Hibberd said told Herald Sun.
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