The cost of living in Australia has risen sharply in recent years, and housing costs are a big part of that. But it isn't just home buyers who are feeling the stress of housing insecurity.
For renters, rents have kept climbing, and many aren't coping financially.
News reports regularly surface of families being forced to live in caravans, and increasing homelessness even amongst those who are currently employed.
But, is there really a housing crisis in Australia? And if so, what can be done about it? Let's take a closer look.
Australia's housing crisis in numbers
Will young Australians be able to purchase homes?
Home ownership in Australia has been slowly falling since the 2000s. At the 2021 Census, 67% of households owned their home, down from 70% in 2006, according to the Australian Institute of Health and Welfare (AIHW).
The fall is much sharper for younger Australians. The National Housing Supply and Affordability Council's State of the Housing System 2026 report notes that the home ownership rate for households aged 25 to 34 fell from 61% in 1981 to 43% in 2021.
At this point, many Australians (especially those in younger age groups) are giving up on owning homes and are forced to rent or move back in with their parents.
What's causing this dip? Part of it is due to changing lifestyle choices (e.g. staying single for longer). But other studies have found that a large part of this is due to rising real estate prices.
Unfortunately, even renting might not put an end to the worries of those seeking housing, as increased costs in the housing market create a domino effect on renters.
Rental properties are more scarce and unaffordable
In August 2026, Cotality (formerly CoreLogic) put the national rental vacancy rate at 1.9%. That is its highest level since January 2025, but still well below the pre-COVID decade average of 3.3%. Nationally, vacancy rates have mostly stayed below 2% since early 2022.
Rents are still rising. Cotality's rental index rose 5.7% in the 12 months to August 2026. Over the past five years, rents are up 39%, which means renters are paying around $200 a week more than they were in 2021.
The National Housing Supply and Affordability Council found that rental affordability reached its worst level on record in 2025, with 33.1% of median household income needed to pay the median rent.
For people on low incomes, the picture is even worse. Anglicare Australia's 2026 Rental Affordability Snapshot looked at nearly 49,000 rental listings and found that a single person working full time on the minimum wage could afford just 0.5% of them. Only one rental in the whole country was affordable for a person on JobSeeker.
These numbers alone are probably enough to indicate that there's definitely a housing and rental crisis in Australia.
But unfortunately, the issues don't stop there.
A 2022 study by UNSW's City Futures Research Centre for the Community Housing Industry Association used 2021 Census data to estimate that 640,000 low-income households were not in appropriate housing. These households were experiencing homelessness, living in overcrowded homes, or spending more than 30% of their income on rent.
Without changes in policy, the study projected this could rise to around 940,000 households by 2041.
Homelessness is on the rise
Another key metric reflecting the severity of the housing crisis is homelessness rates across the country.
The most recent full count comes from the 2021 Census. The ABS estimates that 122,494 people were experiencing homelessness on Census night in 2021, up 5.2% from 2016. Because the population grew faster, the rate eased slightly, from 50 to 48 people per 10,000. Homelessness estimates from the August 2026 Census are not yet available.
Young people make up a large share. In 2021, 23.0% of people experiencing homelessness were aged 12 to 24, and a further 20.8% were aged 25 to 34.
One in five (20.4%) people experiencing homelessness in 2021 were Aboriginal and/or Torres Strait Islander people.
NSW had the largest number of people experiencing homelessness in 2021, while the Northern Territory had by far the highest rate, at 564 people per 10,000.
More recent service data shows the pressure continuing. In 2024–25, specialist homelessness services helped almost 289,000 clients. Of the 169,000 clients who needed accommodation, about a third (33%, or around 56,000 people) did not get it, either directly or through a referral, according to the AIHW.
The RBA raised the cash rate three times in the first half of 2026, in February, March and May. Higher rates add to costs for landlords with a mortgage, as well as for owner-occupiers. Check the RBA website for the current cash rate.
What is causing the housing crisis in Australia?
There are many factors contributing to the housing affordability crisis in Australia, but it generally comes down to a mixture of pricing and supply factors:
Increasing home prices means rent is going up too
According to the 2026 Demographia International Housing Affordability report, which uses data from the third quarter of 2025, Sydney is the second least affordable major housing market in the world. Its median house price is 14.0 times the median household income, just behind Hong Kong (14.1). Adelaide (11.2) ranked fourth, and Brisbane (9.9) and Melbourne (9.5) were also rated "impossibly unaffordable".
Cotality data shows national home values rose 23.9% over the five years to August 2026. That is after values fell for five months in a row, leaving them 3.6% below the peak reached in March 2026.
People's earnings haven't kept pace. The ABS Wage Price Index rose 18.2% over the five years to the June quarter 2026, and 3.2% over the latest year.
Even the first hurdle to owning a home (your house deposit) is enough to make the average Aussie feel priced out of the property market. The National Housing Supply and Affordability Council estimates it took 11.2 years to save a deposit in 2025, up from 9.0 years in 2015.
Of course, these numbers don't tell the whole story.
Housing prices vary widely from city to city, with some cities seeing much sharper increases than others.
For example, the ABS puts the mean dwelling price in NSW at $1,304,900 in the June quarter 2026, compared with $918,400 in Victoria and $614,400 in the Northern Territory. Growth has varied too. Over the five years to August 2026, Cotality data shows Perth values up 79.7% and Brisbane up 64.1%, while Sydney rose 5.6% and Melbourne fell 3.9%.
Some have also blamed government policies around negative gearing and capital gains tax breaks, arguing they encourage over-investment and push up prices.
In the 2026-27 Budget, the Government announced changes to both. From 1 July 2027, negative gearing will be limited to new builds for residential investment properties bought from 7:30pm AEST on 12 May 2026, and the 50% capital gains tax discount will be replaced with cost base indexation and a 30% minimum tax on capital gains. Properties held before the announcement are exempt from the negative gearing change.
Others suggest that zoning, which restricts how many homes are built on each block contributes to housing supply issues. But this has been challenged by some experts.
This rapid increase in housing costs is putting immense pressure on middle and low-income earners, many of whom are being forced out of the market altogether.
And it's not just buying that has become more expensive. As covered above, rents have risen 39% in five years, roughly double the growth in wages over a similar period.
Not enough housing to meet the demand
Lack of housing is an issue that's plagued Australia for the past 20 years. A 2021 report from Grattan stated that Australia had just over 400 dwellings for every 1,000 people, among the least housing stock per adult in the developed world.
In the few years leading up to the COVID-19 pandemic, the nation actually saw a pick-up in the construction of new housing.
Under the National Housing Accord, governments aim to build 1.2 million well-located homes in the five years to June 2029. In its 2026 report, the National Housing Supply and Affordability Council estimated that around 980,000 new homes could be expected over that period, with the 1.2 million mark not reached until around September 2030. It also warned that conflict in the Middle East adds uncertainty to that outlook.
Pandemic impact on housing supply
Even though there was an issue with not enough new homes being built long before COVID-19 hit our shores, it certainly made the problem worse.
There were supply chain disruptions, which meant that everyone from contractors to manufacturers were hit with limited supplies of building materials. There was also a labour shortage due to travel and movement restrictions.
This has resulted in delays in home construction and a decrease in the overall supply of homes.
Other causes
Some other factors that have led to the housing crisis include:
- Natural disasters like floods and bushfires have destroyed homes and impacted incomes.
- Reduced rental property investors.
- Not enough affordable housing with long waitlists.
- Some state and federal government schemes have ended (like the eviction moratorium).
- A surge in the number of people looking for rental properties.
What is being done to solve the housing crisis in Australia?
The Australian government is currently using various ways to provide more affordable housing. This includes:
Building more affordable public housing
Many experts have highlighted that one of the best long-term strategies for addressing the housing crisis is to build more affordable public housing.
Public housing is subsidised by the government, making it more affordable for low-income families.
In addition, it can be built quickly and efficiently, providing much-needed relief to families who are struggling to find a place to live.
Plus, this doesn't only benefit those in lower income brackets. When you house more renters in affordable public housing, it frees up properties within the private rental market as well.
The Albanese Labor government announced a $10 billion Housing Australia Future Fund in 2022, promising 30,000 social and affordable homes in its first five years. The Government has since committed to delivering 55,000 social and affordable homes by mid-2029. As at 30 April 2026, Treasury reported that 7,002 of those homes had been delivered, with another 22,845 in planning or under construction.
Government assistance for first home buyers
The Australian government offers a variety of assistance programs to help first-time home buyers purchase a home.
Firstly, there's the First Home Owners Grant. It's a one-off payment from your state or territory to help first home buyers buy or build a new home. The amount and rules vary by state: for example, it's $10,000 in NSW, Victoria and WA and $30,000 in Queensland, while the ACT doesn't offer one.
The Australian Government 5% Deposit Scheme (formerly the Home Guarantee Scheme) allows eligible first home buyers to purchase a property with a deposit of as little as 5%, without paying Lenders Mortgage Insurance. Since 1 October 2025 there are no limits on places and no income caps, but property price caps apply.
Under the Help to Buy shared equity scheme, which opened to applications in December 2025, eligible buyers can purchase with a 2% deposit while the Government contributes up to 40% of the price of a new home, or up to 30% of an existing home. It's open to Australian citizens only, and income and price caps apply.
The government also offers the First Home Super Saver Scheme, which allows buyers to save for a deposit using their superannuation, with voluntary contributions of up to $15,000 a year and $50,000 in total.
Bear in mind that some of these schemes were set up by the federal government, but they may differ in how they're implemented in various states.
You can check out our guide to all the first home buyer schemes available in Australia for more detailed information.
Commonwealth rent assistance
The Commonwealth Rent Assistance (CRA) is a form of financial assistance that is provided to eligible low- and moderate-income renters in Australia. This applies to those renting in the private market or community housing.
To be eligible for the CRA, you must fulfil certain conditions. For example, you must be receiving certain types of government benefits.
The amount you'll receive depends on your family situation (e.g. single or couple). Check Services Australia for the current rates.
CRA has been criticised for being too low compared with median rents in cities like Sydney. In a February 2025 report, the Grattan Institute recommended raising Rent Assistance by 50% for singles and 40% for couples.
Deposit programs
At OwnHome, we help all customers navigate the housing market and get onto the property ladder - without needing hundreds of thousands up front for a deposit.
If you’re considering buying a home and would like to learn more you can use the buying power calculator or sign up to talk to someone from the team.
What can you do if you're having difficulties affording housing
Here are some steps you can take if you're having trouble affording housing:
- Look for government assistance programs that can help with home ownership, rent, or mortgage payments. Most notable ones for first-time home buyers include the first home owners grant and the first home super saver scheme which allows you to use superannuation to purchase a home.
- Talk to the landlord or mortgage company and see if there are any options for deferring payments or reducing the amount owed.
- Explore local state and community organisations that offer financial assistance for those struggling to afford housing.
There's no question that Australia is in the midst of a housing crisis, but it's not an insurmountable problem.
By taking steps to increase the supply of affordable housing and tame home prices, we can make life easier for those who are struggling to keep a roof over their head.
