Apartment Prices Predicted to Surge 20% by Decade's End

Australia’s apartment market could emerge as one of the stronger-performing parts of the residential property sector over the remainder of the decade, despite the current slowdown affecting the broader housing market.

CBRE’s latest Apartment Outlook forecasts median apartment prices across major Australian markets to rise by around 20% between 2026 and 2030. The strongest growth is expected to occur in 2028 and 2029, as demand strengthens while new apartment supply remains constrained.

A key factor behind the outlook is Australia’s continued population growth. Strong migration has increased demand for housing, particularly in the major capital cities, while many new residents initially enter the rental market before eventually considering home ownership. This growing pool of potential buyers and renters is expected to support apartment demand over the medium to long term.

At the same time, the supply of new apartments is expected to remain relatively limited. CBRE forecasts apartment completions to average about 54,800 per year over the next five years, compared with around 74,200 per year over the previous decade. High construction costs, funding constraints and development feasibility challenges are making it more difficult for new projects to proceed at the same pace as in the past.

This imbalance between demand and supply could also place additional pressure on rents. CBRE expects median apartment rents across 53 capital-city precincts to increase by around 26% between 2026 and 2031, with vacancy rates remaining tight in many locations.

For investors in Melbourne’s western growth corridor, this outlook highlights the potential importance of well-located apartments and townhouses, particularly in areas supported by strong transport connections, employment access, shopping facilities and population growth.

As detached homes become less affordable for many buyers, apartments may attract more interest from first-home buyers, downsizers and investors looking for a lower entry price. This affordability advantage could become increasingly important if borrowing capacity remains constrained by higher interest rates.

However, not every apartment will perform equally. Investors should still consider the quality of the building, body corporate costs, location, local vacancy rates, future competing supply and the type of buyers or tenants likely to be attracted to the property.

Newer apartments may also command a premium where they offer better energy efficiency, modern layouts, stronger amenities and lower immediate maintenance requirements. CBRE has noted that newer apartment stock can achieve significant price and rental premiums compared with older properties.

For Melbourne’s west, apartment investment may become increasingly relevant as the region continues to grow and diversify. Areas close to transport hubs, major employment precincts and expanding town centres could benefit if population growth continues while new housing supply struggles to keep pace.

The current housing downturn may therefore create a contrast between short-term weakness and longer-term opportunity. While apartment prices may remain under pressure in the near term, CBRE’s forecast suggests the combination of population growth and constrained construction could support stronger values and rents later in the decade.

For investors, the key will be to focus on well-located properties with sustainable rental demand rather than simply assuming all apartments will benefit equally. If the anticipated supply shortage develops as expected, quality units in growth corridors such as Melbourne’s west could become increasingly competitive assets over the medium to long term.