Australia’s residential property market is seeing a gradual rise in construction, with apartments set to dominate new housing supply in 2025 and beyond.

PRD’s Australian Economic & Property Update reports that while residential construction increased slightly in the second half of 2024, the market remains undersupplied, presenting opportunities for property investors.

PRD Chief Economist Dr. Diaswati Mardiasmo notes that apartment projects gained momentum in late 2024, offering buyers a more affordable entry point into the market.

“New dwelling costs in Brisbane and Perth continue to rise due to trade shortages and high demand for houses,” she says.

“Units remained the dominant planned ready-to-sell stock in 2024 and will continue to be in 2025 and beyond, except in Hobart and Adelaide.”

As a result, Mardiasmo predicts that freestanding houses will remain in short supply, driving further price increases.

Meanwhile, surging demand for units is already pushing prices higher, with evidence of unit price growth outpacing house price growth in certain markets.

Sydney leads the unit development pipeline with 32,208 units under construction, followed by Brisbane (25,184), Melbourne (20,671), Canberra (16,594), and Perth (2,590). Hobart has 710 units in the pipeline, Adelaide 180, and Darwin 163.

While Sydney dominates unit developments, it also leads in proposed land lots, with 8,726 planned.