Australia’s apartment sector is finally poised for a substantial revival after years of underbuilding and stalled construction pipelines.

For much of the past decade, new apartment commencements have lagged behind population growth and rental demand, creating a major imbalance—particularly in capital city markets. Forecasts now indicate that multi-unit dwelling starts will begin climbing meaningfully from 2026. Industry projections show commencements rising from roughly 70,000 in 2025 to around 100,000 by the end of the decade. This represents one of the most significant structural shifts anticipated for the housing sector over the next five years.

A range of demand-side forces are underpinning this shift. Rapid population growth—driven primarily by skilled migration—has sharply pushed up rental demand, resulting in vacancy rates that remain at or near record lows in almost every capital city. Many households who would traditionally seek detached homes in middle-ring suburbs are now priced out due to higher construction costs, limited supply of developable land and rising mortgage rates. Apartments, particularly well-designed and well-located options, are increasingly becoming the default entry point into metropolitan markets.

New-home sales overall continue to show resilience. Quarterly sales volumes remain around three-year highs, supported by earlier rate cuts, low unemployment and strong immigration. The main constraints facing the new-build sector are not a lack of demand but rising land prices, planning bottlenecks, financing hurdles and shortages of skilled trades. These constraints have helped keep supply tight, which in turn has strengthened the investment case for apartments.
Government initiatives, including the Housing Australia Future Fund, are also shifting development activity toward more social and affordable housing—segments that often favour higher-density formats due to land-use efficiencies. This will likely contribute to a more consistent pipeline of apartment construction over the coming decade.

For investors, this creates a promising medium-term window. Well-located new and near-new apartments—particularly those close to transport, universities, hospitals and employment clusters—are positioned for stronger rental and capital growth. However, quality remains essential. Build integrity, strata costs, developer reputation and maintenance obligations must be carefully assessed to avoid long-term issues.