Developers Abandon Western Sydney Apartment Plans

Rowan Ashford

Published: February 10, 2026 4:58 PM ET

In Western Sydney, the dream of homeownership is dimming for many renters. A public servant, Dave Anderson, has spent nearly ten years renting in the area. He laments the scarcity of affordable apartments, stating, “Unless I suddenly win the lottery, I’m not going to own a house in Sydney.” Anderson advocates for converting more land into apartments, highlighting the ample space available.

Developers Abandon Western Sydney Apartment Plans

Despite the land availability, developers are stepping away from new apartment projects in Sydney’s western regions. Industry experts attribute this trend to escalating construction costs and rising interest rates. Tom Forrest, CEO of Urban Taskforce Australia, stressed the challenges of financing apartment developments in areas beyond Parramatta.

Current Market Conditions

22,000 approvals for new projects in Western Sydney over the last year
Only 11,000 of these have progressed to construction

Forrest pointed out that insufficient demand among buyers is curtailing the number of viable developments. The scenario starkly contrasts with the eastern suburbs, where financing challenges are less pronounced.

Impact of Interest Rates

The recent increase in interest rates has amplified concerns surrounding the feasibility of apartment projects. KPMG urban economist Terry Rawnsley noted that higher rates diminish consumer borrowing capacity, thus reducing demand. This situation may further incentivize developers to focus on areas east of Sydney.

Long-term Consequences

Rawnsley warned of potential long-term impacts if affordable housing remains scarce in Western Sydney. An exodus may occur, with residents moving to cities like Melbourne or regions such as south-east Queensland and Newcastle in search of more affordable living.

Government Actions and Challenges

In January, Landcom, a government developer, canceled plans for three housing projects that would have introduced around 1,500 homes to the market. The rationale behind this decision was the increasing costs associated with land acquisition and construction.

Mark Bernberg, director at Ray White Projects, noted that significant construction costs and bureaucratic hurdles contribute to developers’ reluctance to invest in Western Sydney. He emphasized that many developers face financial struggles or potential bankruptcy.

Government Initiatives

The Minns government is promoting a Pre-sale Finance Guarantee scheme.
This scheme aims to assist eligible housing projects in securing financing.
More than 10,000 homes have been declared ‘state significant’ by the Housing Delivery Authority.

NSW Planning Minister Paul Scully assured that the government is working to enhance housing accessibility and support timely construction. He highlighted efforts aimed at reducing bureaucratic delays to help alleviate the ongoing housing crisis in Western Sydney.