Queensland is dominating residential price growth, but McGrath Research says Sydney’s subdued new apartment market highlights a more fundamental problem for housing supply – projects still need to stack up financially before developers can build them.
Australia’s push to deliver more housing is running into a fundamental development problem, with new research showing the prices being achieved for new apartments vary dramatically between markets and may not be sufficient to support additional construction in some cities.
The McGrath Residential Price Index Spring/26 found Brisbane apartments were the strongest-performing of the 30 east coast residential markets tracked, rising 21.6 per cent in the year to Q2 2026.
Brisbane houses followed with annual growth of 18.5 per cent, while Regional Queensland apartments increased 15.6 per cent and houses 15.1 per cent.
But the disparity in new apartment values points to a broader issue for the development industry as governments seek to increase housing supply.
New high-rise apartment values increased 14 per cent annually in Brisbane and 13.9 per cent on the Gold Coast, compared with just 1.3 per cent in Sydney.
Sydney’s new high-rise apartment values also declined 0.6 per cent over the latest three-month period, while Melbourne’s increased 7.2 per cent annually and 0.7 per cent over the quarter.
McGrath National Head of Research Michelle Ciesielski said the results demonstrated the substantial divergence that had developed between Australia’s residential markets.
“Queensland is clearly the standout in this Index. Brisbane apartments recorded annual growth of 21.6%, while new high-rise apartment values increased by around 14% in both Brisbane and the Gold Coast,” she said.
“At the other end of the spectrum, Sydney’s new high-rise apartment market recorded only 1.3% annual price growth. This is particularly significant at a time when Australia needs considerably more new housing.”
For the property industry, McGrath said the performance of new apartment markets needed to be considered alongside the challenge facing developers attempting to bring new housing projects to market.
“Developers are being called on to build more homes, but ultimately projects still need to be financially viable. New apartment prices are an important part of that equation, and where achievable selling prices do not support the cost and risk associated with development, getting projects out of the ground remains difficult,” Ms Ciesielski said.
“Sydney illustrates the challenge particularly well. New high-rise apartment prices have risen only 1.3% over the year and declined 0.6% over the latest three months. If new apartment values are not increasing sufficiently to support project feasibility, there is limited incentive for developers to commence additional supply.”
The findings come as increasing housing targets and planning capacity are being relied upon to create opportunities for additional development, but McGrath argues those measures do not necessarily translate into completed homes.
“There is an important distinction between planning for more housing and actually delivering more homes. Developers need confidence that a project will be feasible before construction can proceed. Australia’s housing shortage cannot be addressed simply by asking the development industry to build more if the economics of delivering those homes do not stack up,” Ms Ciesielski said.
“This creates a difficult cycle. We need more housing supply to accommodate population growth and improve choice for buyers and renters, but weak project feasibility can constrain the very construction needed to deliver that additional supply.”
While Queensland dominated the annual rankings, conditions across the broader Index softened over the latest quarter.
Across McGrath’s 30-market basket, residential prices increased an average 5.7 per cent over the 12 months to Q2 2026 but declined 0.6 per cent during the quarter.
Annual growth was down from 7.1 per cent in the previous quarter, although it remained above the 4.8 per cent recorded a year earlier. Twenty-five of the 30 markets recorded positive annual price growth, while 18 recorded growth over the latest quarter.
The Index also points to established apartments outperforming houses in several capital city markets.
Brisbane apartments increased 21.6 per cent annually compared with 18.5 per cent for houses, while Sydney apartments rose 3.3 per cent compared with 3 per cent for houses.
In Melbourne, apartments increased 3.2 per cent over the year while house values declined 0.5 per cent.
“Apartments provide a lower price point into many established markets, and the Index shows apartment values outperforming houses in Brisbane, Sydney and Melbourne over the past 12 months,” Ms Ciesielski said.
“For buyers who want to remain close to employment, infrastructure and established amenity, apartments can provide an alternative when detached housing becomes increasingly difficult to afford.”
The prestige market presented a considerably different picture.
Melbourne prestige house values declined 6.1 per cent annually, while Sydney prestige houses fell 3.7 per cent. Brisbane prestige houses increased 2.1 per cent and Gold Coast prestige houses rose 1.8 per cent.
Prestige apartments performed more strongly in several markets, with Brisbane up 4.9 per cent annually, Melbourne 3.4 per cent and the Gold Coast 2.8 per cent, while Sydney prestige apartments declined 1.6 per cent.
Regional markets were also prominent among the stronger performers.
Regional Queensland occupied two of the top four positions in the Index, with apartments increasing 15.6 per cent annually and houses 15.1 per cent.
Regional Tasmania houses increased 12.5 per cent, while Regional NSW apartments rose 8 per cent and houses 6.8 per cent.
The McGrath Residential Price Index is a valuation-based index tracking residential price movements across 30 markets on Australia’s east coast.