Developers are still moving. Nearly half nationally intend to start new projects in the next six months, according to NAB’s latest Commercial Property Survey. But the action is concentrated: 75% of Queensland developers plan to commence work in that window, alongside 67% in Western Australia. NSW sits at 46%. Victoria and South Australia trail at 28% and 25%.
The national average of 49% beats the long-run baseline of 47%, but that number hides a deepening geographic divide. Two states are building ahead of demand. Three are not.
Why Queensland and WA keep building
Infrastructure pipelines matter. Queensland’s $100-billion pipeline, the Cross River Rail, Bruce Highway upgrades, and Olympic prep work, is pulling population and employment into Southeast Queensland corridors. Western Australia’s iron ore royalties and lithium expansion are funding similar momentum in Perth’s outer ring.
Migration flows follow infrastructure. Queensland added 110,000 net interstate arrivals in 2023, the highest on record. WA pulled 42,000. Both states are absorbing skilled workers priced out of Sydney and Melbourne, creating immediate housing pressure in growth corridors where land is still affordable and approvals move faster.
Cost structures diverge. Land in outer Brisbane or Perth costs 40% to 50% less per square metre than equivalent sites in Melbourne’s growth zones. Approval timelines in Queensland average 12 to 18 months for greenfield subdivisions; Victoria’s can stretch past two years. Lower holding costs and faster project turnover let developers maintain cashflow even when pre-sales soften.
Nine in 10 developers nationally now plan to use existing land bank holdings for future projects, up from 74% last quarter. That’s not a sign of caution. It’s positioning. Developers who bought land two or three years ago in high-growth corridors are moving to lock in supply before the next rate-cut cycle lifts buyer activity.
What the lagging states face
Victoria’s 28% figure reflects a compounding problem. Approval bottlenecks, higher land taxes, and a sluggish pre-sales market have pushed Melbourne developers into a wait-and-see posture. That might make sense for individual balance sheets, but it deepens the state’s structural undersupply.
New South Wales sits in the middle at 46%, propped up by pockets of Western Sydney activity where infrastructure investment (the new airport, metro extensions) is creating similar dynamics to Queensland’s growth corridors. But the state’s overall pipeline is thinner than population inflows justify.
Australia’s 1.2-million-home Housing Accord target requires 420,000 completions by the 21-month mark. The actual figure: 307,635. The shortfall is 112,000 dwellings, and it’s widening. The gap sits almost entirely in the states where developer activity is slowest.
Callout: In Plain English
Developers don’t build because sentiment surveys tell them to. They build when the maths works: land cost, approval speed, pre-sale thresholds, and exit pricing. Queensland and WA still clear those hurdles. Victoria and South Australia increasingly don’t. That gap compounds over time, because housing supply moves in long cycles and today’s stalled projects are next year’s undersupply crunch.
What this does to price trajectories
Supply follows demand with a 24-to-36-month lag. Queensland and WA are building into that lag now, which should moderate price growth in those states over 2026 and 2027 as completions ramp up. Planning reforms in WA are accelerating that process further.
Victoria and NSW face the opposite pressure. Slower construction pipelines today mean tighter stock in 18 to 24 months, especially if interest rates fall and buyer demand returns. That sets up a scenario where the states that need supply most get it last.
Rental markets amplify this. Queensland’s vacancy rate sits at 0.8%, WA at 0.7%. Both are critically tight, but new supply is visibly coming. Victoria’s vacancy rate is 1.4%, not as severe, but the pipeline to ease it is thinner.
Red flags for the next 12 months
Pre-sales remain the binding constraint. Developers can hold land and plan projects, but banks won’t fund construction until pre-sale thresholds hit 60% to 70%. If buyer confidence stays weak through winter, Queensland and WA’s strong intent figures could soften by the December quarter.
Cost inflation is easing but not reversing. Material and labour costs are 30% to 35% higher than pre-pandemic. That’s already priced into feasibility models, but any fresh supply-chain shock (tariffs, fuel prices, another construction insolvency wave) would hit marginal projects hardest.
Interest rate timing creates asymmetry. If the RBA cuts in late 2025, it lifts buyer confidence and pre-sales, which benefits the states already moving. If cuts arrive later, or not at all, the states waiting for better conditions stay stuck.
Scenarios and watch points
Base case: Queensland and WA maintain higher activity levels through 2025, delivering 15% to 20% more completions than Victoria and NSW relative to population. Price growth moderates in the north and west by 2026, stays firm in the southeast.
Upside: rate cuts arrive mid-2025, pre-sales lift nationally, and Victoria’s stalled pipeline restarts by early 2026. The supply gap narrows but doesn’t close.
Downside: pre-sales stay weak, more developers pull back, and the 112,000-dwelling shortfall widens to 200,000 by mid-2026. That pushes rental stress higher and price corrections further out.
What to track: quarterly approvals data by state, pre-sales velocity in growth corridors, developer margin compression, and whether Victoria introduces any meaningful approval-speed reforms in the next state budget.
Regional markets are already showing this divergence play out in pricing. The developer pipeline is the leading indicator of where that split goes next.
If you’re buying in a high-growth corridor, check what’s actually under construction within 5 kilometres. If you’re holding investment property in a lagging state, the supply gap might work in your favour over the medium term, but only if demand holds and completions stay slow.
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General info, not financial advice.
