Off-the-plan unit prices have surged by a record 24% year-on-year, driven by escalating construction costs and ongoing labour shortages.

According to research firm Urbis, the average cost of a new unit has reached $19,000 per square metre, marking the largest increase in over a decade.

For residential mortgage lenders, this upward pressure on prices is reshaping borrower profiles, deposit requirements, and risk assessments across major urban markets.

The average price of presales and under-construction apartments in Sydney, Melbourne, Brisbane, Perth, and the Gold Coast has now climbed by 34% compared to the previous year.

The Brisbane unit market has shown particularly strong performance, with Urbis reporting that off-the-plan prices rose 33% in the December 2024 quarter, now averaging $23,000 per square metre.

These significant increases are placing additional emphasis on accurate property valuations and loan-to-value ratio (LVR) assessments for off-the-plan lending.

Data from the Australian Bureau of Statistics indicates that approvals for apartments, townhouses, and semi-detached dwellings rose by 7.5% over the 12 months to February.

This suggests growing medium-density supply, but at elevated price points, lenders may face increased demand for higher loan amounts and more complex serviceability scenarios.

Urbis Director Mark Dawson notes that owner-occupiers now account for 55% of off-the-plan purchases, up from 43% in 2018.

This shift underscores a change in buyer sentiment, with a stronger emphasis on long-term residence rather than speculative investment.

Meanwhile, the share of foreign buyers has declined to 8%, while local investors represent 24% of sales, and interstate investors account for a further 13%.