What the new population figures tell us about Australia’s housing needs – realestate.com.au

Australia’s latest population forecasts show that sustained growth will continue to test the country’s ability to deliver enough new housing, even as the rate of population growth begins to slow.

According to the 2025 Population Statement released by the federal government, Australia’s population is expected to reach 31.5 million people by 2035-2036.

Published annually by the Center for Population since 2020, the statement provides insights into demographic trends to help governments plan for future housing, infrastructure and service needs as Australia’s population changes.

Population growth is expected to slow, to 1.3% in 2025-2026 and 1.2% from 2026-2027, below the average of 1.4% recorded in the 2010s.

Yet Australia is still expected to add more than 300,000 people per year in the second half of this decade.

Net overseas migration – the main driver of population growth – fell to 306,000 in 2024-2025, lower than previously forecast and almost half of the post-COVID peak. This number is expected to decrease further to 260,000 in the period 2025-2026 and decrease again in the forecast period.

Population growth is expected to remain uneven across states and territories.

Western Australia is expected to show the fastest growth in the short term, with the population increasing by 1.8% in 2025-2026. Victoria, Queensland and Western Australia are expected to be the fastest growing states over the next decade, while New South Wales is expected to remain the most populous state in the country, reaching 9.6 million people in 2035-2036, or 30.6% of the national population.

The forecasts come as Australia works to achieve its housing ambitions under the National Housing Agreement, which aims to add 1.2 million new homes between July 2024 and mid-2029.

Achieving that goal would require the construction of approximately 240,000 new homes per year. However, according to data from the Australian Bureau of Statistics (ABS), 168,050 homes started construction nationally in the 2024 calendar year.

Treasurer Jim Chalmers said progress has been made across the economy, but acknowledged the scale of the task ahead.

“We have made a lot of progress in our economy in recent years, including building more homes, strengthening our migration environment, investing in skills and helping to lower the cost of living for Australians, but we recognize the job is far from over,” he said.

Treasurer Jim Chalmers said the country has made progress economically. Photo: Getty

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Analysis from the Housing Industry Association (HIA) shows that Australia is well lagging behind in its housing supply needs, while income and population numbers continue to grow.

HIA senior economist Tom Devitt said population growth continued to outpace housing stock.

“This is the central challenge facing the housing market in 2026,” he said.

“A limited supply of new homes contributes to upward pressure on rents, prices and inflation itself, which in turn feeds through to higher interest rates.

“It is especially counterproductive that the shortage of housing supply is putting pressure on inflation and interest rates, further hampering the construction of new homes.”

Despite the ongoing supply shortage, the latest approval figures for ABS buildings show that momentum is starting to increase.

In November 2025, total housing approvals rose 15.2% to 18,406, the highest level since February 2022, largely due to approvals for higher-density housing such as apartments and townhouses.

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