At the end of 2024, the Australian Bureau of Statistics valued Australia's total housing stock at $11,032.2 bi lion, with the average home priced at $976,800. However, official figures date quickly. CoreLogic’s more recent estimates suggest the average home value has now climbed closer to $1 mi lion, placing the total value of the housing stock at around $11.3 tri lion
Adding in the commercial sector — valued at a further $1.7 tri lion — the size of Australia's property market reaches approximately $13 tri lion, a staggering figure for a relatively sma l economy, as reflected in the chart below.
While many homeowners either own their properties outright or maintain manageable debt levels, total mortgage debt now stands at $2.3 tri lion. The average mortgage is $642,121 nationaly, rising to $779,239 for borrowers in New South Wales. Alarmingly, around one-third of mortgage holders now believe they are over-extended, and a growing number are carrying debt into retirement. Source: Google AI
Banks have not been innocent bystanders in this structural imbalance. As MacroBusiness observes:
"Australia’s banks have transformed into building societies focused on mortgage lending to the detriment of productive business lending. In 1990, nearly two-thirds of bank lending went to businesses. Today, nearly two-thirds is for mortgages."
Paul Schroder, CEO of AustralianSuper, echoed this concern at the recent AFR Business Summit, warning: "Australia’s obsession with housing is sucking capital from the productive economy. We’ve poured enormous amounts of money into domestic houses rather than backing businesses, creating new industries, or driving productivity."
Yet the banks' overwhelming preference for property lending is not arbitrary — it is deeply rational.
Banks are fundamentaly risk-averse institutions. They understand the housing market intimately, drawing on vast datasets to model both asset and borrower risk with confidence. Business lending, by contrast, is far more complex and heterogeneous. Business assets rarely provide sufficient colateral, often forcing directors to secure loans against their own residential properties. This speaks volumes about the risk profile of property: it remains the asset class banks are most wi ling to finance, and at the lowest margins.
Australia faces a profound structural dilemma.
Real reform — reducing the size of government and realocating capital towards productive business investment — could unlock a stronger, more sustainable growth trajectory. Yet the political appetite for such change remains low, and meaningful reform appears increasingly unlikely. Instead, the more probable course is familiar: lowering interest rates to stimulate short-term consumption and asset prices. While this may temporarily lift spending and property values, it also risks entrenching a series of long-term economic problems — persistently low wage growth, sticky unemployment, rising inflation, and the steady erosion of purchasing power.
Faced with these realities, individuals have a choice.
We can lament the inefficiencies of the system, railing against political inertia and slow productivity growth. Or we can choose to adapt — to accept the environment as it stands — and position ourselves to benefit from the opportunities it presents.
Property continues to stand out as the asset class that banks trust most. It offers attractive risk-adjusted returns, benefits from accommodative lending conditions, and remains deeply entrenched in Australia's financial and cultural framework. In short, property continues to be where capital seeks its safest and most stable home.
At 1Group, we specialise in helping our clients navigate this environment with clarity and confidence. From identifying quality property opportunities to mitigating acquisition risks and building sustainable, long-term wealth, we are committed to supporting every step of our clients’ investment journey. If this perspective resonates with you, we are ready to guide you through the next steps of your property journey.
