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The Shifting Landscape of Building Development in Victorian and NSW

At EDG.Space, we’re always monitoring building design and architectural trends to ensure our designs remain relevant and innovative to meet our clients' evolving needs.


But we’re also interested in the trends and challenges facing the entire building industry, particularly in Victoria, NSW and Eastern Australia.


With escalating costs of living that don’t seem to be slowing down any time soon and continued pressure on the rental market, let’s look at some of the changing dynamics shaping the current residential building landscape.





Rising Costs are Reshaping Property Development


According to PropTrack’s November New Homes Report, in the last 12 months, construction costs have surged by almost 5%. 


This was caused primarily by an increase in input prices and labour shortages, especially in finishing trades like painters, joiners, decorators, plasterers, carpet and tile fitters and tilers who work on giving homes their final appearance.


Given these challenges, property developers are moving away from more traditional developments that have been popular in recent years. Instead, they’re exploring other options, which is likely to have a big impact on market dynamics in 2024.


Changing Focus


Not surprisingly, due to escalating construction costs, property developers have had to reevaluate their approach to consider not only affordability but also changes in how people live. 


According to realestate.com.au, the volume of one-bedroom apartments being built has decreased by over 15%. In contrast, the volume of four-bedroom apartments has seen an increase of just over 75%.


Given we’re in the middle of a housing crisis across Australia, are developers predicting more families will move into apartment living or assuming that many people are also considering shared housing to help reduce their living costs?


Whatever their thinking, developers seem to be understanding their market well. For example, properties over $1 million, especially 4-bed apartments priced at over $2 million, are experiencing the highest year-on-year increase in buyer enquiries.


Interestingly, the market for properties under $500k has also decreased. We’re seeing a surge in listings at higher price bands, some of which are in the region of $3 million plus. 


High-End Apartments on the Rise


High-end luxury apartments are gaining popularity, with developers incorporating a range of hotel-style concierge services, including on-site restaurants, wine cellars and in-home cinemas.


For example, in October, the highest volume of apartment development listings were three-bedroom properties priced between $1 and $2 million. 


These luxury apartments are proving particularly popular to downsizers and cashed-up couples who don’t want to compromise on luxury and seek convenient and hassle-free living.


What This Means For First-Home Buyers


The recent surge in construction costs, along with developers shifting their focus towards luxury properties, adds even more of a challenge for first-home buyers who are already struggling to get onto the property ladder. 


Although new builds are usually a more affordable option, their location in areas located outside the city centre can make it less appealing to many younger buyers. Many of these developments are also restricted in terms of design, with many design and build developers offering limited designs, making it challenging for people seeking unique or innovative designs.


Interestingly, as apartment prices are driven up and become less accessible to first-home buyers, we’re seeing an increase in demand for medium-priced houses. Particularly two-bedroom houses priced between $500-$700k, which have surged almost three times compared to this time last year. 


Industry Challenges and Future Outlook


The residential building industry has experienced significant challenges in recent years due to the impact of COVID-19, soaring costs for materials and project delays that have affected numerous construction companies. 


According to ASIC, over 1,700 construction companies in Australia entered administration between July 2022 and April 2023, including some well-established names such as Porter Davis, Probuild, Pivotal Homes, and Qattro. 


At EDG.Space, we expect the construction landscape to continue to evolve. We hope that building costs will be reduced to allow more people to secure affordable housing options without compromising on design. 


If you’re considering building and looking for tailored design solutions that align with the constantly changing dynamics of the current property market, we can help. Our building designers specialise in creating memorable and innovative designs to meet your specific needs. 


Get in touch to discuss your project and how we can help. 


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