Across the globe, the housing market is facing a trio of challenges: a mismatch between supply and demand, affordability concerns, and shifting economic conditions. As policymakers and industry players grapple with these issues, the experiences of Australia, Malaysia, and the United States reveal both the complexity of the crisis and the diversity of possible solutions.
In Australia, the housing crunch is driven by a simple but stubborn equation: there just aren’t enough homes to meet demand. Reserve Bank of Australia (RBA) Governor Michele Bullock recently highlighted this imbalance, noting, “The issue with the housing market is supply and demand – we have demand for housing that outstrips the supply of housing and it's occurring both in housing prices and rents.” According to Bullock, the rental market is particularly tight, with more people seeking rentals than there are properties available. She acknowledged the efforts of governments—especially in New South Wales—to address the shortage through planning and construction, but stressed that “more needed to be done.”
Bullock was candid about the timeline for improvement, warning that new housing measures “will take years to make a meaningful impact,” and supply constraints are likely to persist through 2026. The Australian market’s reliance on investors adds another layer of complexity. “Investors can exacerbate the cycle of the housing market,” Bullock explained. While investors do provide rental stock, their activity can also amplify price swings. Australia’s rental sector is unusually investor-heavy compared to other developed economies, which complicates questions about who will provide rental housing if investor participation drops.
Despite past concerns about risky lending, the RBA currently sees no alarming rise in loan-to-value or debt-to-income ratios. “At the moment though, we don’t see it manifesting in a severe way. We aren’t seeing LVRs and debt-to-income ratios rising substantially. That’s a positive,” Bullock said. Still, she emphasized that the RBA’s influence is limited to monetary policy, with its primary mandate being inflation. “The problem in the housing market is a structural deficit of supply… I’m not confident it’s going to make any impact in the next two years,” she admitted. High construction costs, population growth, and limited new supply could keep affordability pressures high, even if inflation continues to ease.
Meanwhile, Malaysia’s housing market faces a different, but equally thorny, problem: oversupply, especially in urban centers. As Budget 2026 was presented to Parliament on October 10, expectations ran high for measures to address long-standing challenges such as housing oversupply, affordability gaps, and mismatched demand. The National Property Information Centre’s (Napic) 2024 report revealed that 23,149 completed residential units—mostly high-rise condos and apartments—remained unsold, worth RM13.94 billion. While this represents a decline from 2023, the overhang remains a structural drag, concentrated in cities like Kuala Lumpur, Johor, Perak, and Penang.
Faizul Ridzuan, CEO of FAR Capital, didn’t mince words about the root of the crisis: “The real crisis isn’t under-supply or over-supply, it’s mis-supply. We don’t have a shortage of homes; we have a shortage of the right homes in the right locations at the right price points. Until developers and the government are guided by hard data rather than guesswork, the overhang will keep repeating itself.”
One possible solution under discussion is reviving the build-then-sell (BTS) model, which would require developers to complete projects before selling them. While this could protect buyers, Faizul warns it may also “choke project pipelines and dramatically reduce supply and competition” if not backed by proper demand analytics and financing support. Rent-to-own (RTO) schemes, touted as an affordability fix, have seen weak uptake—Maybank’s HouzKEY program is a rare exception—and broader participation from banks remains elusive.
Legislative amendments and stricter compliance measures are on the horizon, with Budget 2026 expected to align funding and enforcement to new laws. Incentives for affordable housing are also anticipated, but with tighter definitions to ensure subsidies reach those most in need. Observers point to Singapore’s more nuanced approach to defining affordable housing as a potential model for Malaysia. Ultimately, the future of Malaysia’s housing sector depends on whether new supply can be aligned with real demand, rather than simply ramping up construction.
Turning to the United States, the housing market’s recent volatility can be traced to a series of economic shocks and policy responses. After inflation soared above 9% in 2022, the Federal Reserve hiked interest rates to cool the economy. By the end of 2024, inflation had dropped closer to the Fed’s 2% target, prompting a shift toward lower rates. However, mortgage rates remained stubbornly high, rebounding toward 7% even after rate cuts in 2025. This has kept the market cool, with both buyers and sellers wary of making moves.
On September 17, 2025, the Fed cut the federal funds rate by 0.25 percentage points—the first cut since December 2024—but mortgage rates still hovered at 6.36% on October 8. Redfin, a real estate brokerage, reports that many buyers are holding out for further rate drops. “Redfin agents in much of the country say house hunters are waiting for rates to drop more before making a move,” wrote Dana Anderson, a Redfin data journalist. The median sale price, meanwhile, is up 2.1% year-over-year, the biggest jump in six months.
There are some signs of life: newly listed homes rose 2.3% compared to last year for the four weeks ending October 5, the largest increase in over three months. But pending home sales declined 1.3% year-over-year, and homes are sitting on the market longer—an average of 48 days before going under contract, the slowest September pace since 2019. Economic uncertainty, including concerns about government shutdowns and weak employment data, continues to dampen buyer enthusiasm.
For those willing to take the plunge, the current market offers leverage. “It’s a buyer’s market, with house hunters asking for price reductions, doing inspections, and requesting concessions,” said Jesse Landin, a San Antonio Redfin agent. Sellers are often forced to accept lower offers and sweeten deals with extras. Condominiums, in particular, present a potential bargain: Redfin notes a 72% seller surplus nationwide in this segment. Some builders are also offering mortgage-rate buydowns and other incentives to entice buyers into newly built homes.
Despite the differences in detail, a common thread runs through these three markets: the need for better alignment between what is built and what people actually want and can afford. Whether it’s Australia’s investor-dominated rental sector, Malaysia’s surplus of high-rises, or America’s rate-driven standstill, the housing market’s future will be shaped by how effectively policymakers, developers, and lenders adapt to shifting realities on the ground. For now, the path forward looks anything but straightforward.
