New report says supply of new apartments is falling way short of what's needed to meet Australia’s surging population
Mortgage brokers are being urged to brace for ongoing tightness in the apartment sector, as new research reveals Australia’s pipeline of new apartments is being slashed amid escalating construction costs and persistent feasibility hurdles.
CBRE’s latest Apartment Vacancy and Rent Outlook reveals that the supply of new apartments is falling well short of what’s needed to meet Australia’s surging population. The report now expects only around 60,000 new apartments to be delivered annually from 2025 to 2030 - significantly below the 75,000 units a year required to stabilise vacancy rates.
Since 2023, the forecast for new apartment completions has been trimmed by about 50,000, reflecting the mounting challenges developers face in bringing projects to market. “What we’re seeing is that there have been delays which artificially boosted 2025 completions (from 2024),” said Sameer Chopra, CBRE’s Pacific Head of Research, according to a report by the Property Council of Australia. “Supply over 2026 and 2027 reflects continuing challenges experienced in 2024-25 in feasibility. Rising construction costs and elevated interest rates have been the main culprits – the price is not right.”
CBRE expects capital city vacancy rates to tighten further, dropping from 1.8 per cent in 2025 to just 1.1 per cent by 2030 - less than half the average vacancy rate seen over the past decade. In Sydney, annual apartment completions are forecast to average just 11,700 through 2030, a figure dwarfed by the estimated demand for 30,000 new homes each year. Melbourne faces an even starker gap, with only 9,000 apartments expected annually against a demand for 38,000 homes, pushing vacancy down from 2.1 to 1.4 per cent. Brisbane’s outlook is similarly constrained, with 4,600 new apartments per year versus a need for 16,000, and vacancy tightening from 1.1 to 0.7 per cent.
Chopra noted that apartment prices have lagged well behind construction costs over the past five years, with a 20 per cent gap making existing apartments increasingly attractive to investors. “Our long-term forecasts assume that owner occupiers will comprise 60 per cent of new supply purchase. CBRE expects apartment values to accelerate from 2025 as consumers adapt to higher income, low supply and scope for falling interest rates,” he said.
He also pointed to the growing role of institutional investors, with build-to-rent (BTR) projects expected to account for around 10 per cent of new apartment supply- roughly 6,000 units a year - over the next five years.
New home construction outlook upgraded
In contrast to the apartment sector’s woes, the Housing Industry Association (HIA) had previously upgraded its forecast for new home construction. The HIA now expects more than one million new homes to begin construction across Australia in the five years to June 2029, up from the previous forecast of 986,000. This revision, outlined in the HIA’s latest quarterly Housing and Economic Outlook Report, is attributed to recent policy developments and higher-than-expected population growth .
According to the HIA, 28,620 detached houses commenced construction in the March quarter of 2025, with similar numbers forecast for the rest of the year. The outlook suggests a continued recovery, peaking at 125,840 in 2027 before easing to 116,370 in 2029, as land availability becomes more limited and multi-unit dwellings become relatively more affordable.
