Australia built 173,000 homes in 2025, still short of target: what it means for first home buyers

Australia completed roughly 173,000 new homes in 2025, well short of the 240,000 a year the National Housing Accord says is needed to hit its target of 1.2 million new homes by 2029. Industry data released this month confirms builders are working faster than they were when the Accord began in July 2024, but the gap between homes built and homes needed has not closed. For first home buyers, this is one of the clearest structural reasons prices have stayed sticky even as the market cools in places.

What the numbers actually show

The Housing Industry Association estimates the country is tracking toward a shortfall of close to 200,000 homes by the end of the five-year Accord period if current completion rates continue. Some industry modelling puts the true annual requirement even higher, at around 250,000 homes a year, once shrinking average household sizes and population growth are factored in on top of the existing housing backlog.

There is a genuine bright spot: construction times have improved by about 10% since the Accord started, meaning approved projects are reaching completion faster than they were two years ago. The bottleneck now looks less like building speed and more like the volume of projects getting started in the first place.

Why a supply shortfall matters to your deposit timeline

• Undersupply puts a floor under prices. Even in suburbs where growth has slowed or reversed month to month, a persistent shortage of new stock limits how far prices can fall, particularly for the entry-level homes first home buyers compete for.
• Supply is uneven across the country. Approvals and completions are not spread evenly - some states and regional growth corridors are adding stock faster than others, which is part of why affordability looks so different from city to city right now.
• New-build pipelines affect grant and concession eligibility. Several state schemes and stamp duty concessions favour new or off-the-plan builds, so a slow-moving pipeline can mean longer waits for the homes those concessions are designed to support.

What this means for first home buyers

A national supply shortfall is not something any individual buyer can change, but it does shape the decisions worth making right now:

• Do not assume a cooling market means abundant new supply is coming to fix affordability quickly. Structural shortages like this tend to close over years, not months.
• If you are considering a new build or off-the-plan purchase, check whether your state's first home buyer concessions apply, since eligibility rules and price caps differ by state and by whether the home is new or established.
• Growth corridors with active building activity can offer better value than established inner-city suburbs where supply is most constrained, though it is worth weighing that against commute times and future resale demand.
• Get a clear read on your borrowing capacity now. Knowing your realistic price range helps you act with confidence when the right property comes up, rather than losing time recalculating under pressure.
• Keep an eye on building approvals in your target area over the coming months. A sustained pickup in approvals is usually the earliest sign that supply pressure in a particular suburb or corridor is starting to ease, well before it shows up in completion figures.

Run the numbers

Use these tools to work out how the current market affects your own first home buying plan:

• Borrowing Power Calculator - see roughly how much you could borrow today, so you can compare it against prices in the suburbs and growth corridors you are watching
• Grant Stacker - check which state and federal grants or concessions could apply if you are looking at a new or off-the-plan build
• True Cost Calculator - get a fuller picture of what buying now versus waiting could cost you, beyond just the purchase price