Where to invest next? Here are the undersupplied regions across Australia
These undersupplied regions are expected to be investment hotspots in 2025.
A new white paper, Australia’s Housing Supply Crunch FY24/25, by InvestorKit revealed the top metropolitan and regional areas where the housing demand exceeds the supply available, making them hotspots for potential investment.
The report analysed 330 regions in SA3 zones across the country and found that Perth and regional Queensland top the list of areas where housing supply is struggling to meet demand.
SA3s are areas defined by the Australian Bureau of Statistics and usually have populations between 30,000 and 130,000. In cities, they include areas served by major transport and commercial hubs and often match the boundaries of large local councils.
To determine which regions are undersupplied the most, the white paper analysed each region through established supply risk, future supply risk, housing availability, people movement, price pressure, rental pressure, and price trends.
According to the report, 25 metro and regional areas have been identified and deemed worthy of investment, with Perth and regional Queensland as the top five markets.
The report also noted a shift, with the housing shortages moving from major capital cities to smaller cities and regional areas compared to 2023.
The five key markets that are facing the most severe supply crunch in 2025 are:
- Fremantle (Greater Perth): Over the past decade, Fremantle’s population has grown by 14 per cent, while the number of homes listed for sale has decreased by 29 per cent. At the same time, new building approvals have dropped by 77 per cent in the last three years.
- Bayswater–Bassendean (Greater Perth): In the last decade, the population of Bayswater–Bassendean grew by 7 per cent, while the number of homes available for sale dropped by 21 per cent. Additionally, the approval rate for new house builds has fallen by 65 per cent in the past three years.
- Joondalup (Greater Perth): Joondalup’s population increased by 4 per cent in the last 10 years. Additionally, the number of homes for sale decreased by 31 per cent, and building approvals fell by 62 per cent over the last three years.
- MacKay (Regional Queensland): The population of Mackay grew by 7 per cent over the past decade, while the number of homes for sale declined by 40 per cent. In the last three years, new building approvals have decreased by 50 per cent.
- Gladstone (Regional Queensland): Over the past decade, Gladstone’s population grew by 8 per cent, while the number of homes listed for sale dropped by 31 per cent. In the last three years, the approval rate for new house builds declined by 48 per cent.
Additionally, the report listed further areas in South Australia, such as Prospect-Walkerville, Mitcham, Port Adelaide-East, Tea Tree Gully and Onkaparinga.
The report authors said that the regions selected will likely have momentum and are set for “robust growth” in the coming years, and will benefit from the upcoming interest rate cuts.
CEO and founder of InvestorKit, Arjun Paliwal, said despite being potential hotspots for investors, Australia is experiencing a chronic supply crunch, causing property prices to skyrocket.
“The housing supply shortage cannot be resolved by simply building more homes,” Paliwal said.
“If that approach were effective, Australia wouldn’t find itself in this situation despite a 20 per cent increase in total dwelling stock over the past decade. Instead, we see the number of for-sale listings is 30 per cent lower than it was 10 years ago.”
“Our housing market is among the least affordable in the world due to growing demand, low established supply and a decline in national average household size, and we are still a long way from resolving the issue.”
According to Paliwal, Australia’s housing shortage requires a “multifaceted approach” to solve the current crisis.
“Australia needs a more evenly distributed population, better infrastructure services in regional areas, a more efficient planning system to streamline land supply and provide development certainty, and a fairer tax system to encourage stock mobility,” he said.
“Additionally, we must support more diversified housing providers, such as build-to-rent, and foster an investor-friendly environment.
“These steps are essential to create a sustainable housing market for the future,” Paliwal concluded.