The Government Won’t Admit The Truth About Australia’s Property Market. You’re About To Pay For It
By: Niro Thambipillay
October 4, 2026
Australia’s housing pipeline is falling short of the government’s 1.2 million-home target, and the forecasts discussed in Niro’s October 2026 analysis point to fewer homes being built next year. That supply squeeze could make finding a home harder even while property prices are correcting.
Niro Thambipillay examines the latest approvals figures, the differences between states and the warning signs in new-home sales. His central argument is that today’s softer prices do not solve tomorrow’s housing shortage. Buyers, owners and renters need to understand where demand is growing faster than the number of homes available.
TL;DR
Australia needs about 240,000 new homes a year to meet its housing target, but the forecasts cited in the video put the current financial year near 208,000 and the following year at 191,800. Approvals are uneven across states, and weaker new-home sales could reduce future supply further. Niro expects that shortage to support a 2027 rebound in selected markets, especially where owner-occupier demand is strong and little new housing is being built.
Key Takeaways
- The video describes a shortfall of around 90,000 homes, about 18% behind the required pace at that point.
- Forecast construction of roughly 208,000 homes is still about 32,000 below the annual target.
- Supply is not falling everywhere. Local approvals matter more than a national average.
- Approvals reflect earlier decisions; new-home sales offer an earlier signal of the pipeline.
- Higher building costs and financing costs can discourage construction even when established-home prices fall.
- Niro sees a possible buying window before Christmas 2026, but his outlook depends on the particular market.
What Is the Housing Data Actually Showing?
The government’s National Housing Accord target is 1.2 million new homes over five years, equivalent to 240,000 a year. In the video, Niro says Australia is around 90,000 homes behind the required pace, or approximately 18%.
The concern is the direction of the pipeline. The projections he discusses suggest building activity could decline as higher interest rates, rising fuel costs and investor tax uncertainty affect decisions made today.
1. Even the Best Forecast Year Falls Short of the Target
The current financial year is forecast to deliver just under 208,000 new homes. Against the annual target of 240,000, that leaves a gap of about 32,000 homes even in what the analysis describes as the strongest year ahead.
Oxford Economics Australia’s forecast cited in the video then falls to 191,800 homes over the next financial year, roughly 16,000 fewer. At that level, construction would be around 48,000 below the annual target. A shortfall that keeps widening means more households can end up competing for a limited pool of homes.
2. The Supply Story Changes from State to State
The approval movements Niro discusses are far from uniform. New South Wales records a 4.5% decline in private-sector house approvals and a 17.3% fall in the units figure he highlights. In Queensland, house approvals rise 6.5%, while the apartment-related approvals figure falls 22.5%.
Victoria’s house approvals are roughly flat at a 0.5% increase, while its dwelling-units figure rises 8.9%. South Australia shows much stronger increases: 27.7% for houses and 24% for units. Western Australia records increases of 8.6% and 3.2% respectively.
These are the state movements discussed in the video, not proof that every suburb has the same supply conditions. For investors choosing the right areas to invest in, the next step is to check the actual projects and approvals in the target suburb.
3. Owner-Occupier Demand Matters More Than Investor Hype
An increase in approvals can make finding a home easier, but it can also limit an investor’s capital growth if new supply outpaces demand. Niro warns against buying into a suburb filled with apartment towers simply because units look affordable.
His alternative is to look for established homes or units in locations where owner occupiers want to live and little competing stock is being built. He gives the example of a two-bedroom unit around $500,000 in a suburb with limited new construction. The price alone does not establish an opportunity; the local supply-demand balance does.
That distinction also explains why avoiding the wrong investment property types matters as much as choosing a city. A national shortage can coexist with an oversupplied pocket.
4. Approvals Can Hide a Weaker Pipeline Ahead
Building approvals are a lagging indicator. They often follow purchases and development decisions made months earlier, so today’s approval figures can reflect better conditions in the previous year.
Niro highlights the Housing Industry Association’s warning that fewer people are visiting display villages and builders are finding it harder to convert visitors into signed contracts. New-home sales typically come before approvals, making that slowdown a warning for future construction.
The economics of building are also getting tougher. Established-property prices can fall while construction costs keep rising. Buyers may be reluctant to carry higher interest costs through a build lasting one or two years. Those pressures can reduce the flow of new homes precisely when more supply is needed.
5. A Recovery Can Begin Before the Data Confirms It
Niro points to the 2022 to 2023 cycle: prices fell during 2022, then the market turned around in early 2023 even though the RBA continued raising rates. He believes a similar supply squeeze could contribute to a rebound in 2027.
Buyer activity can change before published price data catches up. A purchase first needs to settle, then appear in the relevant reporting period. Niro argues that increased activity seen in October may not become clear in quarterly figures until February or March.
This is why preparing to buy property in 2026 requires looking at current competition, local supply and your own finances. Niro’s view is that the period before Christmas may offer opportunities, but the video does not identify a guaranteed turning month or a uniform recovery everywhere.
The Verdict: Softer Prices Do Not Fix a Housing Shortage
The key risk is a continuing gap between housing demand and new construction. A short-term correction can give buyers room to negotiate, while a weakening pipeline makes access to housing harder further ahead.
If you already own property
Review the supply pipeline and owner-occupier demand in your suburb rather than assuming a national headline describes your market. A shortage elsewhere will not necessarily protect an area with substantial new construction.
If you are buying or renting
Compare your target market’s population demand with the homes actually being approved and built. Buyers should also assess borrowing capacity, repayments and cash-flow buffers. Renters face the same underlying shortage when new homes fail to keep up with the number of households looking for somewhere to live.
Summary
- The 1.2 million-home goal requires around 240,000 new homes each year.
- Forecasts near 208,000 and then 191,800 point to a continuing shortfall.
- State approval figures vary substantially, so check suburb-level supply.
- New-home sales can signal a slowdown before it appears in approvals.
- Construction and financing costs can discourage building during a price correction.
- Niro expects a 2027 rebound in selected markets, with demand and limited supply driving his outlook.
Frequently Asked Questions
Yes. Niro expects a rebound in selected markets in 2027 as a weaker building pipeline meets continuing housing demand. This is his forecast, not a guaranteed outcome or a prediction that every suburb will rise. Local supply, owner-occupier appeal, affordability and a buyer’s financial position remain important.
Lower selling prices do not necessarily make construction cheaper. If building and financing costs remain high while achievable sale prices fall, new projects can become less viable and buyers may prefer existing homes. Fewer new-home contracts can then mean fewer approvals and completions later.
Building approvals often reflect contracts and decisions made months earlier. Niro argues that display-home activity, enquiries, conversions and new-home sales can reveal changes in demand before those changes appear in approvals. An approval is also not the same as a completed home.
No. The figures discussed in the video show different patterns across states and property types, including weaker apartment-related approvals in New South Wales and Queensland but stronger figures in South Australia and Western Australia. Buyers should assess the pipeline in the specific suburb and property segment rather than assume the national trend applies everywhere.
The 1.2 million-home target over five years requires about 240,000 new homes a year. In the figures Niro discusses, Australia is about 18% or 90,000 homes behind the required pace. The forecasts he cites are roughly 208,000 homes in the current financial year and 191,800 in the next, both below the annual target.
About the Author
Niro Thambipillay
Niro is the founder of Investment Rise, one of Australia’s most trusted property buyers agencies. He has helped hundreds of first-time investors build property portfolios and was voted one of the most trusted Real Estate entrepreneurs in the Asia Pacific region (APAC 2022). Niro is also the author of “How to Build a Property Portfolio That Pays You an Income Every Month.”
