A new report has cut tens of thousands of apartments from Australia’s forecasted supply pipeline as construction costs put pressure on feasibility.
CBRE’s Apartment Vacancy and Rent Outlook shows that apartment supply is not keeping up with demand, with approximately 60,000 apartments expected to be delivered each year from 2025 to 2030.
Meanwhile, Australia’s forecast population growth requires an apartment supply of roughly 75,000 per year to avoid further falls in vacancy.
Since 2023, CBRE has cut roughly 50,000 apartments from its supply forecast.
CBRE’s Pacific Head of Research, Sameer Chopra, said the group’s forecasts are dynamic and reflect the probability of individual projects proceeding.
“What we’re seeing is that there have been delays which artificially boosted 2025 completions (from 2024). 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.
“Towards the end of the decade, mixed use development around shopping centres and transportation zones should help, along with lower interest rates.”
CBRE expects the capital city vacancy rate to fall further to 1.1% by 2030 from 1.8% in 2025. These tight conditions will persist as vacancy remains at around half the previous decade’s average of 2.5%.
In Sydney, apartment delivery is expected to average 11,700 per year across 2025 to 2030, well below the estimated demand of 30,000 for total housing stock. The vacancy rate is set to fall from 2.0% to 1.2%.
In Melbourne, apartment delivery is set to average 9,000 per year while demand for housing stock is likely to average 38,000 per year over the next five years, driving vacancy down from 2.1% to 1.4%.
In Brisbane, apartment delivery is expected to average 4,600 per year from 2025 to 2030 while housing stock is likely to average 16,000 per year, with citywide vacancy is expected to fall from 1.1% to 0.7%.
Sameer notes apartment values have not kept pace with construction costs over the past five years with the disparity sitting at 20 per cent which makes the existing stock of apartments an attractive market for investors
“Our long-term forecasts assume that owner occupiers will comprise 60% 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,” Sameer said.
“Of the investor market, we see a growing share moving across to institutional build-to-rent (BTR) sector and over the next five years institutional BTR comprise approximately 10% of new apartment supply, equating to about 6,000 apartments per year,” Sameer added.
Charter Keck Cramer’s National State of the Market H1-2025 report also shows Australia’s apartment pipeline remains chronically undersupplied.
While activity is starting to lift in 2025 following interest rate cuts and planning reforms, markets remain heavily constrained.
Melbourne completions are at historic lows, Sydney commencements are around half their long-term average, and Brisbane is projected to deliver less than 40% of its 15-year average over the next four years.
Rising construction costs are a major barrier, with shortages of labour and materials across Brisbane, the Gold Coast, Perth and Adelaide. Brisbane in particular faces costs almost 50% higher than Melbourne and additional capacity pressures in the lead-up to the 2032 Olympics.
Beyond costs, long lead times for planning reform, inefficient taxes and charges, labour shortages, immigration settings, weak buyer sentiment, and financing challenges continue to weigh on supply, the report found.
According to Richard Temlett, Charter Keck Cramer’s National Executive Director, “The next cycle of the housing market has commenced, but its trajectory depends on future decisions by all levels of government, the RBA and APRA.”
