Australia's Housing Market: Over $11 Trillion, A Figure That Underscores Significant Economic and Social Challenges

Conor's Corner

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​Australia's housing market has reached a staggering valuation of over $11 trillion, a figure that underscores significant economic and social challenges. This immense valuation has led to increased household debt, reduced housing affordability, and a diversion of capital away from more productive sectors of the economy.​

Surging Property Values and Household Debt

The Australian Bureau of Statistics (ABS) reports that by the end of 2024, the nation's dwelling stock was valued at $11.03 trillion, with the average home price nearing $976,800. This surge in property values has resulted in Australian households being among the most indebted globally. The average mortgage size has escalated alongside property prices, leading to household debt levels that are among the highest worldwide. 

Economic Implications of a Property-Centric Economy

The disproportionate emphasis on housing investment has significant economic ramifications. A substantial portion of bank lending has shifted towards mortgages at the expense of business investments. In 1990, nearly two-thirds of bank lending supported businesses, while about one-quarter was allocated to mortgages. By early 2025, this trend had reversed, with nearly two-thirds of bank lending directed towards mortgages and only one-third towards businesses. 

This shift indicates a reallocation of financial resources from sectors that drive innovation and productivity to the housing market, potentially stifling economic growth and diversification.​

Productivity Concerns in the Housing Sector

The Productivity Commission has highlighted a 53% decline in housing productivity since 1995, attributing this downturn to regulatory bottlenecks, limited innovation, dominance of small-scale builders, and a shortage of skilled labor. These factors contribute to the escalating costs and delays in housing construction, exacerbating affordability issues.

Calls for Comprehensive Reform

Business leaders are advocating for substantial economic reforms to address these challenges. The CEO Survey 2025 reveals a consensus among top executives on the need for policy changes that enhance productivity, streamline regulations, and promote investment in sectors beyond real estate. Proposed measures include tax system overhauls, energy policy stability, labor market flexibility, and fostering innovation and digital transformation. ​The Australian

The $11 trillion valuation of Australia's property market reflects a complex scenario where perceived wealth coexists with economic vulnerabilities. Addressing these issues requires a balanced approach that includes regulatory reforms, investment in productive sectors, and strategies to enhance housing affordability and construction efficiency. Such measures are essential to ensure sustainable economic growth and equitable prosperity for future generations.​