What 2025 taught us about Australia’s build to rent staying power

Running hard, but not yet far

Australia’s build to rent (BTR) sector has made remarkable moves in a short time.

All the data points in the same direction. A record 6,000 new BTR units are on track for completion in 2025, up from 4,660 in 2024, according to Knight Frank forecasts.

BDO estimates the national pipeline has grown by more than 10,000 apartments and nearly $9 billion over the past 12 months. More than half of the national BTR pipeline is backed by foreign institutional capital with deep pockets and long horizons – but also with a sharp focus on feasibility, governance and disciplined delivery.

This is evidence of a market that has found traction and tempo. But BTR still accounts for only a sliver of the nation’s housing output – less than 1% – and projects are concentrated in a few key inner-city markets.

Victoria leads the way with 51 schemes operating, planned or under construction. But 19 of the 35 projects in New South Wales are still in planning. Queensland has 17 projects at various stages, but faces constraints as high construction costs and labour diversion to Olympic infrastructure projects stretch delivery timelines.

Digging deeper, this year’s wave of completions reflects the market attitude several years ago, when debt was cheaper and capital less risk averse. Overall, around 20,500 BTR units nationally are sitting at the DA-approved stage. The pipeline may be growing, but not all the shovels are in the ground.

Finding the second wind

Demand isn’t the problem. Delivery economics are.

The demand drivers for BTR in Australia are strong: rapid population growth, record migration, chronic undersupply and spiralling rents that have outstripped wage growth.

Australia’s macro fundamentals are also solid: a stable jobs market, consistent GDP growth and a transparent regulatory environment that magnetises global capital.

Policy reform has provided a much-needed tailwind. In 2023, the federal government reduced Foreign Investment Review Board fees and changed BTR tax treatments, giving eligible projects a 4% capital-works deduction and a concessional 15% withholding tax rate under the managed investment trust regime.

Several states joined the race with their own incentives in 2023 and 2024. In 2025, New South Wales went a step further, making its 50% land-tax exemption permanent, while Western Australia launched a $75 million Build to Rent Kickstart Fund.

These settings have lifted returns on paper but come with fine print. To secure the 15% withholding tax rate, projects must dedicate at least 10% of dwellings to affordable housing, introducing layers of compliance and financial modelling complexity that must be factored into feasibility.

Above all, BTR is a state-by-state story. Staying the course will depend on how well developers can navigate divergent incentives, compliance hurdles and shifting costs.

From sugar rush to steady pulse

If 2025 was the sprint, then 2026 is the start of the marathon.

Persistent labour shortages, elusive productivity gains and extended construction durations all have the potential to erode developer margins.

Inflation remains sticky, reflected in the Reserve Bank’s decision to keep interest rates on hold in November 2025. As Reserve Bank Governor Michele Bullock noted: “Housing prices are rising and dwelling construction costs have also started to increase again after a period of weak growth.” The message between the lines is clear: the cost curve is still turning upwards.

To convert pipeline potential into delivered stock, BTR developers must pivot from expansion to endurance – interrogating every line item in their cost plan, scrutinising delivery models and delivering for efficiency as well as scale.

The next phase of growth won’t reward the fastest movers so much as the most disciplined.

The secrets to more stamina

Developers are running smarter, not harder – targeting high-demand sub-markets or prioritising projects that move quickly from funding to occupation to reduce their exposure to cost escalation.

Timing and location matter, as builder capacity varies sharply by state. In Queensland, where a smaller residential contractor base is competing with major infrastructure and pre-Olympics work, the window for cost-effective delivery is narrowing. Engaging contractors early is a pragmatic way to secure capability and stabilise pricing before the next escalation cycle commences.

The shift to smarter sequencing is mirrored in how developers think about the product itself. With feasibility under pressure, the operational lens becomes critical, and build to sell players increasingly understand BTR as a long-term asset rather than a one-off build. They’re looking beyond delivery to decades of ownership. This means paying closer attention to lifecycle costs, material durability and maintenance logistics. In some cases, it means cashflowing fit-outs by staging joinery and finishes to align with leasing absorption rather than installing everything upfront.

Design standardisation, modular systems and modern methods of construction are gaining momentum. One-bedroom formats – more affordable for tenants and more feasible for builders – have become the quiet workhorses of the model. Behind the scenes, creative funding platforms and joint-venture structures are spreading risk, while demanding more sophisticated cost intelligence.

This is innovation led by financial rigour.

The finish line moves

We expect 2026 to offer a window to refine design, financing and operational standards that could underpin the next wave of BTR growth. With around 20,000 approved units still waiting to move, the fundamentals of feasibility will likely decide whether that latent supply becomes real.

For investors and developers alike, the imperative is becoming clear: tighten assumptions, model for resilience and engage early on cost control.

Australia has every reason to succeed. Strong demand, deep institutional capital and a proven delivery capability provide a solid base. But turning a promising sprint into a sustainable marathon will depend on one thing above all else: discipline.

The exuberant sprint phase has demonstrated proof of concept; the marathon will test proof of performance.

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