Australia’s build-to-rent (BTR) market has experienced rapid expansion in recent years, driven by strong demand for rental properties offering long-term security and attractive amenities. However, according to a recent report, the pace of new BTR unit deliveries is expected to slow down in the coming years. This shift could present significant challenges for the industry and the growing number of renters eager to secure these sought-after units.
While the Australian BTR sector remains one of the fastest-growing in the world, experts warn that external economic factors, including high construction costs and financing difficulties, may curtail the momentum that has defined the market over recent years.
Rising Demand and Rapid Growth
The BTR model, which sees developers build multi-unit residential properties to retain and rent out rather than sell, has been gaining traction in Australia, mirroring trends seen in the UK and the US. This growth has been welcomed by renters seeking stability, as BTR properties offer longer leases and better security compared to traditional rental arrangements.
According to Knight Frank’s “Build-to-Rent Update” for Q3 2025, the number of BTR units delivered in 2025 is set to exceed 6,000, surpassing the previous year’s delivery of 4,660 units. This rise represents a substantial shift from the previous five years when annual deliveries averaged fewer than 2,000.
As demand for BTR properties continues to outstrip supply, developers are facing pressure to meet the growing need. In some urban areas, these developments are quickly leased, further underscoring the appeal of this rental model. However, while demand remains strong, Knight Frank’s data suggests the rapid expansion of new units will peak in 2025, with the pipeline forecast to slow significantly in 2026.
The Roadblocks to Sustaining Growth
The future of the BTR sector is now contingent on overcoming several challenges that could limit further development. According to John-Paul Stichbury from Knight Frank Australia, external economic factors such as financing difficulties and high input costs are already impacting the sector’s growth. Additionally, the complexity of securing financial backing for new projects is leading to delays in construction.
At present, around 20,500 BTR units are sitting at the Development Approval (DA) stage, awaiting the necessary financial backing to proceed. These units represent a potential growth area for the sector, but without sufficient investment, their construction could be delayed indefinitely.
Industry leaders argue that government intervention will be crucial to ensuring the sector remains robust. Tim Holtsbaum of Knight Frank suggests that creating a more favourable and simplified tax environment would encourage more institutional investors, particularly foreign investors, to participate. The introduction of tax concessions for foreign-managed investment trusts in 2024 marked a step forward, but further reforms are seen as necessary to maintain Australia’s competitiveness within the global BTR market.
The future of Australia’s BTR sector rests on finding solutions to these economic hurdles and maintaining a steady pipeline of new developments. If these challenges are met, the market could continue to provide valuable housing solutions for renters, while offering long-term security for investors.
