Australia’s housing crisis is intensifying, with new research highlighting severe shortages in Perth and regional Queensland. A recent white paper by InvestorKit analysed 330 regions across the country, revealing 25 metropolitan and regional areas facing critical housing shortfalls in 2025.

Housing Supply Crisis Moves to Smaller Cities and Regional Areas

Historically, housing shortages have been most pronounced in major capital cities. However, the latest data shows a shift, with undersupply now hitting smaller urban centres and regional communities.

Among the worst affected areas is Fremantle, which has seen a staggering 29% drop in homes for sale, despite a 14% increase in population over the past decade. This decline is compounded by a 77% reduction in building approvals over the last three years, significantly restricting the availability of new housing.

Perth’s Bayswater-Bassendean region has also been impacted, recording a 21% decrease in available homes while its population grew by 7% over ten years. Similarly, Joondalup has experienced a 31% fall in housing stock, despite a 4% rise in residents.

Queensland’s Regional Hubs Facing Similar Struggles

The situation is just as dire in regional Queensland, where strong population growth is colliding with dwindling housing supply.

* Mackay has recorded a 40% reduction in available homes while its population grew 7% over the past decade.

* Gladstone saw a 31% decline in housing stock, despite 8% population growth in the same period.

These figures highlight a growing crisis in areas once considered more affordable and accessible for homebuyers and investors.

Why Building More Homes Isn’t the Only Solution

InvestorKit CEO Arjun Paliwal warns that simply increasing construction won’t be enough to fix the problem.

“The housing supply shortage cannot be resolved by simply building more homes,” he explained. “If that approach were effective, we wouldn’t find ourselves in this situation despite a 20% increase in total dwelling stock over the past decade. Instead, we see the number of for-sale listings is 30% lower than it was 10 years ago.”

Call for Reform: What Needs to Change?

The InvestorKit report calls for urgent reforms to address the housing crisis, including:

* Better population distribution: Encouraging growth beyond major cities to ease pressure on high-demand areas.

* Improved infrastructure in regional areas: Investing in transport, health, and education services to support regional communities.

* More efficient planning systems: Cutting red tape to streamline land supply and provide certainty for developers.

* Fairer tax policies: Reducing barriers that discourage housing mobility and investment.

South Australia is also grappling with supply challenges, with undersupplied areas including Prospect-Walkerville, Mitcham, Port Adelaide-East, Tea Tree Gully, and Onkaparinga.

What Does This Mean for Buyers and Investors?

With demand outstripping supply, competition for available properties is expected to remain fierce, particularly in regions experiencing rapid population growth. Prospective buyers may need to act quickly, while investors could find opportunities in these high-demand markets.

As Australia’s housing crisis deepens, solutions must go beyond new construction. A more strategic approach, balancing policy reform with infrastructure investment, is crucial to ensuring long-term housing stability across the country.