This is the official release of Charter Keck Cramer's National State of the Market - Residential Build to Sell (BTS) and Build to Rent (BTR) Apartments, H1 2026 report for key metropolitan areas.
Report Overview
Our Research team has consolidated our market-leading insights into a National State of the Market Report, delivering a comprehensive overview of Australia’s apartment market.
Drawing on our extensive national database, this report examines key indicators including apartment releases, commencements and completions, while offering deep insights into each capital city’s performance. Notable trends and broader market drivers are also analysed to provide essential context at both the national and metropolitan levels.
To view the digital report and download your free copy, complete the form at the bottom of the page.
BTS Apartment Market
The BTS apartment market faces ongoing and increasing headwinds. This is most easily observed in the alarmingly low levels of current and forecast BTS apartment supply across Australia’s capital cities. Set out below under the various headings are some of the key findings from our research for H1-2026.
Impact of the Federal Budget on the BTS Apartment Market.
The Federal Budget Tax changes announced in May 2026 are the most significant changes in the last 30 years. They have created tremendous uncertainty, and many developers, financiers, owner occupiers and investors have adopted a “wait and see” approach until these changes are fully legislated.
Our views are that the Government has misunderstood the impact of these changes on the BTS apartment market. Firstly, there will not be a “one for one” replacement of investors moving from established into new stock. Investors will now fully reconsider all investment decisions including moving into other asset classes. Secondly, there is now a disincentive for new stock, which loses the new dwelling tax benefits upon resale, and which the market will need to price in.
Most importantly, the changes to lending by Self-Managed Super Funds (SMSF) are an error of judgment made on incomplete data and a fundamental lack of understanding of the new housing market. Discussions with our residential valuers shows that SMSF investors make up around 20% - 30% of Off the Plan buyers of BTS apartments in Melbourne or Brisbane and the buyer pool has now disappeared.
The impact of these changes, should they be legislated as proposed, will be that BTS apartment supply decreases even further. This will lead to further rent and also price increases and will have the opposite impact to what the Government is trying to achieve.
We acknowledge that the Federal Government has good intentions however it has failed to make the correct evidence-based decisions with a true understanding of the impact on the new housing market. Government is strongly advised to carve out the SMSF lending changes and allow these buyers to continue to purchase new BTS apartments under the previous settings.
Private credit in the BTS Apartment Market
Whilst private credit has been around in various forms for over 15 years in Australia, it is now well and truly part of the lending landscape in the new housing market.
Private credit has a critical role to play in the new housing market. It is able to provide flexible and customisable solutions to projects and developers that are typically not available from the Big 4 Banks at various points in the market cycle.
Private credit played an essential role during the pandemic and is in fact the primary reason many BTS apartment projects survived as the Big 4 Banks withdrew from the market.
Private credit in 2026 however is facing major issues that cannot be ignored. In the last 3 years, there has been a surge of players in this space. Our observations are that not all of these operators have the same lending rigor, risk assessment policies or overall transparency across their funds.
Put simply, there is a lack of transparency with several private credit operators at present and we have concerns about the frequency of valuations being undertaken for several projects in Melbourne and western Sydney.
We are aware that there are active projects in Melbourne and Sydney that are not financially viable at present. Discussions with our valuers shows that private credit is in fact preventing land values in certain projects from correcting and in previous cycles the market would have likely already corrected.
Private credit operators need to be aware of this and there is a risk that the industry perception stands to be tarnished if there is not greater openness and transparency with the status of some projects.
It is interesting to hear that certain developers have mentioned to buyers that they are using the Big 4 Banks for their project financing and this has given buyers greater levels of comfort than if private credit had been involved.
Our advice is that certain providers must be more open with the performance of their funds and also act on projects now so as to avoid undermining the perception of private credit in the marketplace.
Building and construction issues in the BTS Apartment Market.
We have written about the costs of delivery crisis in Australia in previous reports. Government is well aware of the “tax wedge” which is a large contributor to this crisis and is again advised to look to reduce this wedge which will flow through to more affordable housing.
Another factor that needs to be discussed is the inefficiency and lack of productivity and innovation in the building and construction sector. This has also contributed to the dramatic increase in the costs of delivering new housing – particularly BTS apartments.
Our readers would be well aware that it is either land values, building costs or realisable revenues that need to adjust or reset so that the market can once again be activated. Our views are that land values and revenues will adjust across various sub-markets based on the supply and demand dynamics of those markets.
A key variable that is not discussed enough is that of building and construction costs. The industry needs to start to address the issues with the unions in certain States, adopt AI and also Modern Methods of Construction (MMC). This will bring down costs and speed up delivery times for new housing supply.
The Federal and State Governments also need to provide legislative support and incentivise the market to evolve, and in our opinion, this is the next component of the value chain in new housing delivery that needs to be reformed to unlock new housing delivery.
Latent Defects Insurance LDI for Apartment Projects
Our research shows that BTS apartments still suffer from a stigma that needs to be overcome by education. We have written previously that not all BTS apartment projects are the same and not all will leak, crack or catch on fire. Many developers have brands to protect and are very proud of their product but have unfortunately been tarnished by the actions of the minority in the industry.
The LDI is a positive move as is the iCIRT Rating Tool in NSW. This will give buyers more comfort that they are purchasing a dwelling that is fit for purpose and will be rectified without significant out of pocket costs should this be necessary.
Our advice is that the entire industry needs to adopt LDI and also educate the buyer market about these changes so that buyers regain confidence in this asset type.
Finance in the BTS Apartment Market
Our discussions with the Big 4 Banks indicate that they are starting to re-enter the market in anticipation of the next cycle. Pleasingly, there is little distress on their books given they lost market share to private credit over the last few years. They are gaining it back now with very competitive lending terms.
Our views are that the financing of the new Off the Plan BTS apartment market needs to evolve in response to buyer requirements for evidence of construction commencing (or being completed). The financing to date can typically be described as an “investor-product” model rather than an “owner-occupier” model. The “owner-occupier” model needs to offer more flexible products that caters for residual stock and longer sales periods after construction has been completed.
State Governments also need to play a role here and NSW is commended for taking the lead with the pre-sales guarantee. It is positive to see other States including WA and also SA adopting a similar policy and this will greatly assist the industry. Our views are that the Federal Government ought to consider a form of this guarantee as this can underpin the Housing Accord targets and send the correct signals to industry.
Buyer capacity for BTS Apartments
Our research shows that due to rate rises and the costs of delivery it is actually buyer capacity rather than an absence of demand that is holding back buyers in many markets. APRA is helping with the requirement for lower levels of presales, and certain banks are commended for decreasing interest rates on certain loan products notwithstanding the RBA has been increasing the cash rate.
On the ground discussions with sales agents indicate that smaller apartments that are functional and liveable are coming back into demand as they meet buyer budgets. Small, well designed BTS apartments are one of the solutions to the housing crisis that need to be permitted through State planning schemes.
Furthermore, given the changes to SMSF lending, there are a number projects (even in Brisbane) now chasing channels to move stock. This is a risk that needs to be monitored given that new BTS apartments in many sub-markets are up to +30% more expensive when compared to product in 2020. Our analysis highlights that there is settlement risk on the horizon, and the industry needs to be aware of and mitigate this. This can be done by contacting buyers and ensuring they are able to take out the same amount of money as a few years ago when lending conditions were very different.
Finally, given rate rises and the Federal Budget changes, the Big 4 Banks, as well as APRA and RBA must be aware of the growing lending risks that will likely arise in the next 12 months when projects start to settle, and buyers are unable take out what they thought they could take out when they put down their deposit.
Outlook for the BTS Apartment Market
The BTS apartment market has been the beneficiary of substantial planning changes implemented by various State Governments. This has led to a notable increase in development approvals (particularly in NSW). This is however only a piece of the puzzle, and this approved stock will not get built until the costs of delivery crisis as mentioned above is resolved.
On balance the BTS apartment market will continue to face headwinds, and supply will not be mobilised. This is likely to be the case until the buyer market is more comfortable that interest rates have stabilised and additionally the Federal Budget changes are fully legislated and understood by the market.
What has become clear is that land values, costs and realisable revenues need to reset in many sub-markets across Australia. In some markets it will be land values or revenues that adjust over time however it is costs that are the swing variable, and which are more controllable by the industry.
A key learning for the Government is that when it makes significant changes, much like have recently been done at the Federal level, these distort the market and buyer behaviour. The changes need to be fully explained to the public and not be reactionary. Government is encouraged to make evidence-based policy decisions whilst understanding the nuances of the market. Should they do the opposite they will undermine their aspirations and ultimately do more harm than good.
BTR Apartment Market
The BTR apartment market faces fewer headwinds than the BTS apartment market and this is reflected in the increasing levels of current and forecast supply across several capital city markets.
Set out below under the various headings are some of the key findings from our H1-2026 research.
Impact of the Federal Budget on BTR Apartment Market
BTR was an indirect beneficiary of the Federal Budget as it was carved out of any changes. The optics could however have been better as capital has been left a little underwhelmed and unsure by what to make of the Federal Budget.
Given the headwinds now created for BTS apartments our views are that this is a seminal moment in time for BTR to scale up given BTS will not be able to respond.
In our opinion, the Federal Government has inadvertently pushed Australia down a path of renting. In fact, we would go as far as commenting that should the proposed changes be legislated in their current format we may look back at this as the point in time that the Federal Government unintentionally turned Australia into a nation of renters.
BTR Apartments are now part of the housing continuum
There are now 19,000 completed BTR apartments across Australia. These figures, as well as the recent transactions, show that BTR is now part of the housing continuum and can no longer be considered as an alternative asset class. On this basis, BTR needs to be better acknowledged and legislated for in planning and building legislation.
The MSCI Australia Build to Rent Property Index index is also a significant positive step forward. This will help finance with benching returns and provide clarity for the industry on various project metrics and performance.
Finally, BTR projects can also show Australians that higher density buildings are in fact great places to live and if built and maintained well can hold their value and lead to desirable housing outcomes.
Taxes on BTR Apartment Projects remain prohibitive
The single biggest finding from our discussions with industry is the impact of taxes and charges and the signals they are sending to foreign and local capital.
Government taxes are still holding capital back with several developers estimating that the sector could already be two or three times larger than it currently is. Given we are in a housing crisis and the Housing Accord Targets will not be met, this is a finding all levels of Government need to reflect upon.
State Foreign Purchaser Surcharges for example are a huge issue at present and the changes by the NSW Government have been extremely well received by the industry. Other States and Territories are encouraged to follow suit and send the correct market signals to capital that they are open for investment.
Role of BTR Apartments in the current cycle
Our government readers are reminded that BTR projects don’t have to be affordable to have a positive impact on housing supply (and ultimately price and rents). Additional high density rental supply will grow and also rebalance the housing market and allow various household types and income levels different opportunities to enter the housing market across the full spectrum.
Whilst the mid-market has yet to emerge, this will come as the market continues to evolve and mature. Government is advised that affordable or even mid-market BTR will need some form of rental subsidy so that rents can be set below market values but still make projects financially viable. This has in fact been successfully demonstrated in Brisbane where the State Government has subsidised a component of rental accommodation for key workers.
Current Trends in the BTR Apartment Market
Our discussions with industry and various research engagements show that there are many developers, financiers and operators fully exploring the living sectors model (BTR, co-living and also PBSA) on their high-density projects.
There is also a lot of product diversification in these projects with BTR, co-living and also PBSA all being considered across a single project in various buildings. This is mainly occurring in Sydney as these projects chase yields and returns that make projects viable.
Given the renter market is now much better educated on BTR, there has been a focus on brand awareness across projects and platforms. This is a key finding operators and platforms need to be aware of as this is an opportunity to capitalise the quality of the brand into the performance of the asset and portfolio.
There also continues to be a focus by financiers on the efficiency of the respective operating platforms and how net operating income is maximised. Our learnings are that the gross to net ratios are higher than initially estimated (closer to 30% gross to net) although this is anticipated to reduce over time.
Discussions with the industry highlight that there is also no shortage of debt capital for BTR projects. The sticking point remains raising equity capital. Projects that have a DA, are close to current or future transformative public transport and have a builder signed up are most attractive to equity capital at present. Projects without these attributes are struggling to convince equity capital to take the risk in the current cycle.
Finally, there remains little true information on weekly rents given the market is so badly distorted in many sub-markets. Our clients are finding it very hard to set rents in the current environment and evidence of the true rental premium is hard to empirically prove.
Builder’s experience with BTR Apartment Projects
Our research highlights that builders are attracted to BTR projects. The main reasons are that there is a single client, fewer variations or major changes (compared to BTS projects), the projects have scale and builders like the programmatic nature of the projects.
Early Contractor Involvement (ECI) is a great format, and the developer, financier and builder have all experienced positive results with them. ECI appears to be a way of the future for both BTR and BTS projects and is something the industry needs to continue to embrace.
Finally, a key learning is that defects need to get rectified before practical completion (PC) and leasing of the building commences. Whilst this means that PC for BTR takes longer when compared to BTS projects, the outcome is better and this can be capitalised into the leasing velocity, weekly rents and overall brand and reputation of the building.
Outlook for BTR Apartments
Given the significant headwinds facing BTS apartment projects, we anticipate that several will consider pivoting to BTR (or a living sector component such as co-living or PBSA) over the next 6-12 months.
There is also likely to be consolidation of BTR platforms or BTR projects. This may be the strategy of some developers, or it may be borne out of necessity given the growing scale and size of the largest platforms and operators.
Our views are that now is the time for the Australian Superannuation funds to enter this market and scale it. The market has derisked to a point where there is greater transparency in terms of returns. Superannuation funds have a key role to play in this sector given they will be housing many of their members into the future.
Finally, given rents are likely to continue to rapidly increase, we anticipate the inevitable reactionary and short-sighted political response from various levels of Government or political parties about rent controls being raised once again. As we have previously stated, this must not be pursued as it will stifle BTR supply and lead to similar results as is unfortunately happening with BTS apartments.
Charter Keck Cramer is here to support with independent, evidence-based and forward-looking market research and analysis.
We hope you find this version of the report useful. The report will be produced on a six-monthly basis. We will be presenting an update and outlook on the Sydney, Melbourne and Brisbane markets at individual events held annually in each city, in the month of August.
Should you require a more detailed analysis or presentation please reach out to our team of experts, who would be happy to assist you with your queries.
