Construction activity is gradually picking up across Australia, with apartments set to dominate new housing supply in 2025 and beyond.

However, PRD’s Australian Economic & Property Update indicates that despite a slight increase in residential construction in the second half of 2024, the market remains significantly undersupplied.

PRD Chief Economist, Dr Diaswati Mardiasmo, highlights that apartment developments gained momentum in the latter half of the year, providing buyers with more affordable options in a challenging housing market.

“New dwelling costs in Brisbane and Perth continue to rise due to trade shortages and increasing demand for housing,” she explains.

“Units remain the dominant planned ready-to-sell stock in 2024 and beyond, particularly in major capital cities, except for Hobart and Adelaide.”

This persistent undersupply of freestanding houses is expected to continue putting upward pressure on property prices.

Mardiasmo notes that rising demand for units is already driving price growth in those markets, with some areas experiencing unit price growth outpacing that of houses.

Sydney leads the unit development pipeline with 32,208 units, followed by Brisbane (25,184), Melbourne (20,671), Canberra (16,594), and Perth (2,590).

Meanwhile, Hobart has 710 units in the pipeline, Adelaide 180, and Darwin 163. In addition to its strong unit pipeline, Sydney also has the highest number of proposed land lots, totaling 8,726.