A growing structural issue is emerging in Australia’s new housing market. The price point of newly built apartments has become increasingly misaligned with what buyers are willing and able to spend.
This gap is being driven by high construction costs for apartments which mean developers must target higher sale prices to make projects viable. The result is a pipeline of predominantly premium apartment stock.
Over the first quarter of 2026, 56% of new apartments listed for sale on realestate.com.au were priced at $1.5 million or above, well above the national median unit price which was $739,000 in March.
Buyer budgets, however, remain firmly below this level.
According to REA Group’s New Homes Insights Series, there is a significant mismatch between the budgets of buyers and the price points at which new apartment developments are being listed.
The New Homes Insights Series surveyed 2,016 recent and prospective buyers of new homes over February and March 2026, asking them about their budgets.
Among those who recently purchased or were looking to purchase a new apartment, just 12% were looking to spend above $1.5 million. Three-in-four were looking to spend under $1 million.
In contrast, just 26% of new apartment development listings were priced below $1 million over the same period.
Queensland is the state with the biggest misalignment between supply and demand. Across the state, 73% of new apartment listings were priced at above $1.5 million, while 90% were priced above $1 million.
Buyer budgets, in contrast, were typically below this level, with just 12% looking to spend above $1.5 million. Similar mismatches were seen in Queensland and Western Australia.
Surprisingly, $1.5 million-plus listings made up a smaller share of the total in New South Wales and the Australian Capital Territory, accounting for 39% of new apartment listings. But while lower, this remained the most common price category.
A key contrast emerges when comparing apartments to house and land developments.
In the detached housing segment, buyer budgets are far more closely aligned with advertised price points for new supply.
House and land packages are typically structured around affordability thresholds supported by land economics, construction staging, and targeted first-home buyer demand. They also tend to be in more affordable areas where the price of land is lower.
This alignment is far less evident in the apartment sector, where construction costs, height constraints, planning requirements, and financing structures result in higher break-even points for developers. Projects are also often located in highly sought after suburbs where land costs are higher.
The underlying issue is cost. Rising construction expenses, labour shortages, financing costs, and regulatory requirements mean that delivering new apartments at sub-$1 million price points is increasingly difficult in most locations.
As a result, feasibility calculations are forcing developers to target higher sale prices, even when underlying demand is concentrated in lower price brackets.
The implications for future housing supply are significant.
While dwelling approvals for apartments have shown signs of recovery, this persistent mismatch between what is being built and what buyers can afford is likely to act as a constraint on pre-sales and ultimately new project commencements.
At a time when Australia is already facing structural undersupply in housing, this affordability disconnect risks becoming another brake on new apartment delivery.
Without a shift in either construction costs, design expectations, or policy settings that better align feasibility with demand, the gap between what is being built and what buyers can afford is likely to remain a key challenge for the apartment sector.
