Why Housing Undersupply Is Pushing Up What Australians Pay to Borrow
If you’ve been trying to buy a home lately, or even just keeping an eye on property prices, you’ve probably felt it. Fewer listings. Higher prices. Longer waits. Frustrated buyers. The question everyone’s asking is: why aren’t enough homes being built? The Housing Industry Association (HIA) put it bluntly before the Senate Select Committee Inquiry into Productivity in Australia just last week. Australia’s housing affordability problem is, at its core, a productivity problem, and it’s been getting worse for 30 years.
Population is growing, but Supply isn’t Keeping Up
You’d expect that with so many people needing homes, builders would be flat out. And yes, there’s certainly demand. But the industry is actually less efficient today than it was a decade ago.
Australia’s population isn’t slowing down anytime soon. Migration is strong. Demand for housing, especially in Sydney, Melbourne, and south-east Queensland, remains intense.
But new housing supply simply can’t keep pace, because approval timelines have blown out. What might have taken 6 months a decade ago can now drag on for well over a year in some councils. By the time approvals come through, market conditions have shifted, finance costs have moved, and some projects simply get shelved.
The HIA told the Senate committee that inconsistent planning rules across different states and councils are one of the biggest blockers to getting homes built. There’s no unified national framework, no predictability, just a patchwork of rules that slows everything down.
What Needs to Change, And Why It Hasn’t (Yet)
The HIA submission to the Senate wasn’t just a list of complaints. It came with a clear reform agenda: simplify regulation, speed up approvals, stabilise the National Construction Code, and invest in a long-term national settlement strategy.
That last point is important. Australia keeps growing, but we don’t have a real plan for where people will live. We’re relying on a handful of capital cities to absorb most of the growth, and those cities are already stretched.
A proper national strategy would identify where infrastructure goes first, so land can be developed efficiently rather than in a reactive, piecemeal way.
The HIA was direct: we don’t need more reports. This stuff has been studied to death. What’s needed is actual delivery. Reform that sticks. And bipartisan political commitment so housing policy doesn’t get torn up every time there’s an election.
Ready to Understand Your Options?
At OM Financials, we work with buyers across Sydney and beyond to make sense of what the market means for their specific situation, not just in theory, but in terms of actual loan structure, borrowing capacity, and timing. Speak with our brokers today to understand your borrowing power in this market on 0478 876 967 and book your free consultation. Don’t forget to follow us on Instagram and LinkedIn as well.