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At a national level, the numbers can look close to balanced. Australia added 412,500 people in the year to December 2025 and completed 172,794 dwellings over the 2025 calendar year. That equates to 2.4 additional people for every new home completed. Given Australia’s average household size was around 2.5 people at the last Census, it is easy to see why some argue that housing delivery is broadly keeping up with population growth.
But that conclusion relies heavily on one assumption: that average household size is still 2.5 people, and that this is the right number to use. Neither is certain. Population growth is measured regularly, but household formation is not measured with the same frequency. The last clear read came from the 2021 Census, and we will not get another comprehensive update until the next Census. What we do know is that household size has been falling over time, reflecting smaller families, more people living alone, an ageing population and changing living arrangements.
More importantly, average household size describes the existing population, not the people currently driving population growth. Growth is still heavily migration-led, and new arrivals are more likely to be students, younger workers and renters than established family households. That means the relevant household size for new demand is likely to be lower than 2.5. The sensitivity is significant: at 2.5 people per household, 412,500 additional people require around 165,000 homes. At 2.2, the requirement rises to around 187,500 homes. At 2.0, it rises to more than 206,000 homes. On that basis, Australia is not comfortably building enough.
The clearest pressure points are Western Australia and Queensland. WA added around 65,500 people over the year but completed just 20,597 dwellings, or 3.2 additional people for every new home completed. Queensland added 92,200 people and completed 32,912 dwellings, or 2.8 people per new home. Both are well above the national average of 2.4, and both are above the 2.5 average household-size benchmark often used to argue that supply is keeping up. The Northern Territory is also high, although the numbers are small and volatile.
The link with price growth is hard to miss. Cotality’s latest data shows house prices rose by 25.2 per cent over the year in WA and 17.0 per cent in Queensland. These are among the strongest results in the country and sit alongside the clearest evidence of population growth running ahead of new housing delivery. South Australia has also recorded strong price growth, but its supply position looks much better on this measure. That suggests supply is not the only driver of price growth, but where supply is clearly not keeping pace, the pressure on prices and rents becomes far more difficult to contain.
At the other end of the table, Victoria stands out for the right reasons. It added more people than any other state over the year, but also completed the most homes. With 117,300 additional people and 54,221 dwelling completions, Victoria added 2.2 people for every new home completed. The ACT also looks strong, with 1.6 people added per new dwelling, while NSW performed better than might be expected. It added 104,600 people and completed 45,145 homes, or 2.3 people per dwelling. Sydney still has serious affordability and rental challenges, but on this measure, NSW is much closer to keeping pace than Queensland or Western Australia.
Where housing delivery has been stronger, price growth has been far more contained. Victoria is the clearest example. Despite adding the most people of any state, it completed enough homes to keep the ratio of new people to new dwellings down to 2.2. Cotality’s house price data shows Victorian house prices rose by just 2.0 per cent over the year, well below Queensland at 17.0 per cent and Western Australia at 25.2 per cent. Canberra tells a similar story. The ACT added just 1.6 people for every dwelling completed, with house prices rising 5.2 per cent over the year.
Other factors have also weighed on Victoria and Canberra, including weaker investor demand, affordability limits and softer sentiment. But supply is the main point of difference. Where new housing delivery is closer to population growth, price pressure is calmer. Where population growth is running well ahead of completions, prices and rents are doing exactly what should be expected.