Australia’s housing supply and affordability crisis is being felt most acutely by first home buyers trying to enter the market and it’s a problem that governments around the country are trying to solve.
Will they succeed? It’s a tough ask but clearly something must be done to ensure younger generations have access to secure shelter and the financial security that home ownership brings. Private real estate credit also has a major role to play.

The median house price is now more than $1 million in six Australian cities: Sydney, Melbourne, Brisbane, Gold Coast, Adelaide and Canberra after a 5% annual house price increase across the capital cities through the year to June 30, according to Domain¹. The crisis is worst in Sydney where the median house price is now $1.7 million but sharp rises in the other $1 million plus markets and Perth ($955,000) have tipped the balance. Only Hobart ($726,000) and Darwin ($578,000) could be considered affordable.

No matter the market, lack of supply is the key issue. Demand for housing is robust – supported by three interest rates cuts this year and the expectation of more – but sales listings are weak and the construction of new dwellings lags demand. Dan White, Managing Director at Ray White Group, told The Australian Financial Review that listing volumes for Australia’s largest real estate group are down about 20% year on year, exacerbating the imbalance between supply and demand, forcing up prices².

In response, the federal, state and territory governments are using policy to accelerate rezoning and approvals to meet the 1.2 million new homes promised by 2029 in the National Housing Accord, which the Property Council of Australia says will not be met at the current pace³. They have also committed billions of dollars to help first home buyers enter the market through shared equity schemes, stamp duty discounts, accessing super or one-off grants ($10,000 is typical), often targeting those buying new or off-the-plan houses and apartments⁴.

This is to be applauded. We believe government purchase incentives and support for first home buyers are a positive step that will ultimately boost supply and help more Australians get into the housing market through the purchase of an apartment, townhouse or house. However, it will take time and consistent development policy settings to ensure the delivery of new housing. History shows that government stimulus and planning initiatives usually leads to a stronger sales market especially when combined with falling interest rates.

This benefits developers, many of whom have been sitting on the sidelines because of the high cost and complexity of construction by improving development economics, making more projects viable and ultimately resulting in more homes. Meanwhile, mooted zoning changes mean these affordable outlying markets – previously the preserve of house and packages – will become increasingly diverse with townhouse and mid-rise apartments more common, offering an attainable first step onto the housing ladder.

At Centuria Bass Credit, we have had a long-term a strategic focus on financing developments at lower price points in more affordable areas, typically outer suburbs of Sydney, Melbourne and Brisbane. The market for this product is deep, never more so than now. It’s proven to be a sound funding and investment strategy. For example, in southwest Sydney, where CBC is backing several projects, median house prices grew 10% through the 2024 financial year according to Domain - a strong market to be lending against.

We are seeing an increased flow of investment opportunities across the affordable housing sector and expect this trend to continue as the market absorbs and acts on the new policy settings to meet the ambitious housing targets.

1. Domain House Price Report, June quarter 2025

2. https://www.afr.com/property/residential/sydney-home-gets-200k-above-reserve-as-melbourne-
auctions-rocket-20250720-p5mg9m

3. https://www.propertycouncil.com.au/media-releases/home-building-pipeline-still-falling-behind-target

4. https://www.realestate.com.au/insights/budget-bonuses-inside-the-states-2025-plans-to-boost-
housing/