Housing is a hot-button issue around the world as rising interest rates, cost-of-living pressures and the effects of the pandemic and world events on building labour and supply have combined to create a crisis.

Because of this, housing is now one of the defining economic and social challenges of our time—and Australia sits right at the centre of the conversation.

In 2026, the Australian housing market reflects a paradox: a wealthy, high-income country where housing has become increasingly difficult to access and afford. While this issue is global, Australia stands out in a few critical ways.

The current picture in Australia

Recent data shows housing costs are still rising:

• Housing inflation is up 7.2% year-on-year (ABS)
• Rents have increased nearly 48% over the past decade (AIHW)
• Around 1.26 million low-income households are in housing stress (AIHW)
• 26% of all households spend more than 30% of their income on housing (AIHW)

According to the 2025 Priced Out report by national housing campaign Everybody’s Home, Australian renters in 2025 needed an annual income of $130,000 to comfortably rent an average unit, with the median national rent for a unit sitting at $566 per week.

According to the ABS, the median wage for all employees in Australia is $75,000 annually.

So how do we stack up to the rest of the world?

The OECD’s 2026 Economic Survey of Australia paints a bleak picture: housing costs are high, housing is in short supply, and over the past 30 years Australian house prices have risen more relative to household incomes than in any other OECD country. The OECD also says Australia has one of the highest average living spaces per person in the OECD, reflecting a detached-housing model that, while highly desirable for buyers, is costly and uses a lot of land.

The survey also reveals that Australia is also unusually sensitive to interest-rate changes due to a high share of adjustable-rate mortgages, where borrowing costs feed through to households faster than in countries where fixed-rate mortgages dominate.

Our social housing is also a concern, making up a paltry 4% of our housing stock, down from 6% in 1990 and only about half the OECD average. In other words, Australia has less publicly backed housing capacity than many peer economies, just as private-market affordability has worsened.

At the same time, supply is struggling to keep up. Australia has set an ambitious goal of building 1.2 million homes by 2029, but current construction rates suggest we’re not yet on track. The OECD notes that construction productivity is lower than it was 20 years ago, and that first-year building under the Accord ran below the pace needed, implying completions would need to average roughly 255,000 homes a year for the remaining four years to catch up.

Square Holes has worked alongside several private and public housing organisations, looking at efficiency, stakeholder engagement, and the current pressure points in building housing and communities in South Australia.

One such group is Master Builders South Australia (MBSA), the peak body representing South Australia’s building and construction industry, with whom Square Holes has collaborated over the past decade to provide insight into members’ needs and expectations.

Will Frogley, Chief Executive Officer of MBSA, says that the 1.2 million homes was always a “highly ambitious” target set by the government, even before the current challenges being faced by the building industry.

According to Frogley the most pressing issues facing the building industry currently are skill shortages and material cost/availability hikes due to world conflict.

“There is a real problem getting enough skilled tradespeople, especially the more physical the trade is, like brick laying or creating or tiling, for example,” says Frogley.

“And then because of the conflict in Iran, we are seeing prices go through the roof for materials like PVC, aluminium, quarry products and things like that. So that’s quite risky from a builder’s perspective because they have fixed price contracts and they would’ve priced in a margin before the Iranian conflict sent prices going through the roof. So it’s quite risky financially.”

These pressures are met by a rapidly growing demand for housing.

Skye Bayne, Executive Director of Sales and Corporate Affairs at Renewal SA says that South Australia is in a time of expansion, and that investment into innovation is vital to meet growing needs.

Renewal SA’s remit as the South Australian Government’s leading urban development agency includes ‘leading, supporting and driving investment and growth through property and projects’.

“South Australia is growing, and so is Adelaide. Suburbs are expanding, the city is building upward, and major economic opportunities such as AUKUS will continue to attract people to the state,” says Bayne.

“Meeting this level of demand means housing delivery needs to become smarter and more efficient. Government and industry are increasingly focused on innovation, including modular construction to reduce build times and modern transportable housing options that can respond more quickly to regional needs.”

Another recent client, national developers Cedar Woods, believes it is their role as developers to help build the South Australia of tomorrow.  Anna Kelly, Marketing Manager at Cedar Woods says that developers have a responsibility to shape the community.

“Developers have an important responsibility in shaping communities, with their role extending beyond simply delivering housing to influencing broader social and urban outcomes,” says Kelly.

“One of their key responsibilities is to support diversity and inclusion by providing a range of housing options that cater to different income levels, household types and life stages, rather than creating uniform or exclusive developments.”

Looking to the future, Kelly argues that developers need to consider, research and consult on how communities will evolve over time.

“A longer-term perspective is also important with developers expected to consider how communities will function and evolve over time, rather than focusing only on initial project completion,” says Kelly.

“This includes being mindful of local context, environmental factors and sustainability. Overall, developers are responsible for contributing positively to the creation of communities that are inclusive, functional and resilient.”

For Renewal SA, that looks like directing developers to hold profit and community responsibility in balance.

“The balance is achieved by planning housing and community infrastructure together, not as separate conversations,” says Bayne.

Australia’s housing status in 2026 is best described as precarious. We are a wealthy nation with high living standards, large dwellings and strong incomes, but with a housing system that has allowed prices to outpace earnings for too long.

As we move away from a detached style model of housing, how will our communities grow and change? How will our sense of home shift? Current trends point to less personal spaces and more shared space as the need for compact living grows with demand. Fewer yards with a hill hoist and more spaces like Bowden, where a ‘yard’ or green spaces are shared with the rest of the community around you.