Units are now outperforming houses in Perth, Adelaide, and Brisbane, according to new market data showing a shift driven by undersupply, high construction costs, and a growing preference for premium apartment developments.
In Perth, annual unit prices rose by 13.1%, surpassing house price growth at 11.6%. A report from realestate.com.au noted that this trend also appeared in Adelaide and Brisbane, making 2024 the first year units have consistently outperformed houses in three of Australia’s strongest capital city markets.
Research from Ray White shows a substantial decline in new apartment construction. Completions dropped from over 97,000 in 2018 to just 58,913 in 2023. A slight rebound was recorded in 2024, with completions reaching 64,869 units. However, Australia is still projected to fall 60,000 homes short of the National Housing Accord’s annual target.
“The fundamental issue is that hardly any apartments are being built – particularly in the affordable or mid-market segments that once provided accessible housing options,” said Ray White Group chief economist Nerida Conisbee. “When new apartment projects do proceed, they’re predominantly luxury developments targeting premium buyers, pushing median unit prices steadily upward.”
This trend has contributed to a cycle of limited supply and rising prices. According to Conisbee, the lack of affordable apartments has intensified demand for existing units, leading to price growth driven by scarcity rather than an increase in supply.
Elevated construction and land costs are also contributing to the problem. Land prices have risen over 75% since 2020, and construction costs remain 30% to 40% above pre-pandemic levels.
MAS Architecture Studio director Nick Symonds said delivering large-scale apartment projects under current economic conditions had become increasingly difficult.
“These aren’t townhouses or boutique builds,” Symonds said. “We’re talking about substantial residential projects with hundreds of apartments, and developers can’t find a builder willing or able to take them on under current conditions.
“Tier-one contractors have stepped away from major residential developments – not because they lack interest, but because these projects take too long, carry too much risk, and no longer stack up commercially compared to government work.”
As a result, new developments have shifted toward the luxury market.
“Development sites that once supported diverse apartment projects now struggle to make economic sense except for luxury developments,” Conisbee said.
Colliers Queensland residential director Brendan Hogan noted the surge in demand for premium apartments in Brisbane.
“We’re seeing exceptional demand in the premium apartment market, with ‘off-the-plan’ riverfront apartments achieving prices over $35,000 per square metre of net saleable area,” Hogan said.
