In 2026, feasibility is deciding what gets built in Australia as much as demand is. These are six trends developers and investors should understand this year.

1. Feasibility Is the New Gatekeeper

2025's narrative was "there's not enough housing." 2026's reality is "even with demand, projects don't stack up."

Construction costs remain elevated (though stabilising), interest rates have settled higher-for-longer, and end values in many markets are flat or falling. The result: developers are shelving projects that would have been approved two years ago.

What this means: The projects that proceed in 2026 are the ones with real feasibility buffers, typically margins of 15 to 20%. Anything marginal will sit in DA pipelines indefinitely or get abandoned.

2. Momentum Is Moving Beyond Sydney and Melbourne

After years of NSW and Victoria dominating development volumes, 2026 is seeing shifts toward:

Some research firms have identified dozens of locations likely to produce solid growth in 2026, many of them outside the major capitals.

3. Listing Volumes Are Finally Rising

After years of "sellers' market" conditions with record-low stock, more owners are testing the market in 2026. This is taking some heat out of price growth but creating opportunities:

For developers, higher listing volumes mean more potential sites to assess and less pressure to overpay.

4. The Low & Mid-Rise Policy Is Unlocking Sites

NSW's Low & Mid-Rise Housing Policy (Stage 2, February 2025) is now flowing through to actual projects. Properties within 800m of town centres and stations in R2 zones can now support:

This represents a once-in-a-decade upzoning event. The developers moving fastest on these sites are securing land before the broader market realizes the value uplift.

5. Build-to-Rent Is Expanding

Institutional build-to-rent (BTR) projects are multiplying, but 2026 is also seeing growth in private investor BTR strategies:

With rental yields rising and interest rates stabilising, cashflow-positive development strategies are looking more attractive than speculative flips.

6. Construction Costs Are Stabilising, Not Falling

The sharp price rises of 2021 to 2023 have paused. Material costs are largely flat, and trade shortages have eased in most markets. However:

Bottom line: Construction costs won't go back to 2019 levels. Developers need to underwrite projects at current costs, not hope for relief.

The Outlook for Developers

2026 is not a boom year. It's a selective year. The developers doing well are:

The better question: "Where is the next Perth?" is the wrong question. The right question is: "Where can I build something that covers its costs and generates acceptable returns?" Feasibility beats speculation every time.

What This Means For You

If you're considering development in 2026:

  1. Run the numbers conservatively, budgeting for today’s costs and not hoping they fall
  2. Consider growth corridors, since interstate migration is continuing
  3. Look at areas recently upzoned by state policy, where the value change is immediate
  4. Don't overpay, because more supply gives buyers more room to negotiate
  5. Plan for longer holds, because quick resales are harder in a flat market

The developers who treat 2026 as a feasibility-first market will outperform those still operating on 2021-era assumptions.

Related articles:

Development Feasibility Calculator → · R-Codes & Density Controls Explained →