Simon Arraj
Simon Arraj, Founder and Responsible Manager of Vado Private, believes further cuts in interest rates this year could stimulate construction activity and help to lift housing supply in Australia’s biggest cities, which face a crucial shortage of homes.
New data from the Australian Bureau of Statistics (ABS) reveals 43,517 dwellings were completed in the March quarter in seasonally adjusted terms, down 4.7% from a year earlier. That also compares to more than 47,000 dwellings completed in March 2020 and around 45,600 in March 2021.
“While we are still seeing lower building approvals for dwellings compared to four or five years ago, the restriction in housing supply could ease if interest rates continue to fall. This could encourage greater housing construction, which is essential to alleviating the shortage of housing accommodation in Australia,” Mr Arraj said.
“Having said that, new housing supply is currently near decade lows, with only 177,000 new homes completed in 2024,” he said.
The lacklustre figures come as Australia marks one year into the five-year National Housing Accord, in which states and territories must build a combined 1.2 million well-located homes by June 30, 2029. The National Housing Supply & Affordability Council (NHSAC) has released[1] its 2025 State of the Housing System report, which expects only 938,000 dwellings to be built nationwide by mid-2029. The Urban Development Institute of Australia (UDIA) 2025 State of the Land Report[2] has separately forecast a supply shortfall of around 400,000 dwellings for the combined capital cities by 2029, driven by persistent underbuilding relative to population growth and ongoing challenges in the construction sector.
“Given this shortage, we could see further gains in property prices in Australia over the reminder of the year, especially if the central bank cuts interest rates again. ” Mr Arraj said.
“Whether this happens is not clear. The central bank may not want to risk re-igniting inflation, and therefore it could keep interest rates on hold in the second half of 2025. The RBA’s inflation target of 2% to 3% remains a key focus,” he said.
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