It now costs $1,049,123 to deliver a single apartment in a seven storey building in Sydney. That is the 2025 figure in new cost modelling prepared for NSW Treasury by the Centre for International Economics, up from $916,963 in 2023. Against a modelled average sale price of $1,102,721, the project clears its costs by about five per cent. Two years earlier that number was 13 per cent.
The headline is the million dollar apartment. The more useful part is the line by line breakdown underneath it, and a finding that runs against how most infill sites in Sydney are being planned: on the same modelling, a 16 storey building costs less per dwelling to deliver than a seven storey one.
The modelling sits behind Building more homes where the numbers stack up, the fourth housing paper from the NSW Productivity and Equality Commission, released on 29 July.
What is a feasibility gap?
The feasibility gap is the difference between what a dwelling sells for and what it costs to deliver, after a developer margin has already been counted as a cost. In this modelling the required margin is 20 per cent and it sits inside the total cost figure.
So a feasibility gap of five per cent does not mean a five per cent return. It means the project returns its 20 per cent and clears a further five per cent on top. A negative gap means the project does not reach the 20 per cent, which is why it does not proceed even when it is approved.
Where the money actually goes
This is the full delivery cost for one apartment in a seven storey infill building in Sydney in 2025, averaged across the metropolitan area.
Construction $417,000
Required developer margin $175,000
Financing $119,000
Land acquisition $113,000
Car parking $96,000
Professional fees $43,000
Sales and marketing $33,000
Local government infrastructure contributions $18,000
Land tax and stamp duty $14,000
State and other contributions $13,000
Site preparation and demolition $9,000
Total $1,049,000
Two things stand out. Construction and parking together account for roughly half the stack. And the entire package of state contributions, council contributions, land tax and stamp duty comes to about $45,000, or a little over four per cent of the total.
That second number matters because it cuts across a familiar industry argument. The Commission makes the point directly: state and local infrastructure contributions were 2.9 per cent of development costs for a typical Sydney mid rise apartment in 2025, or 4.4 per cent including land tax and stamp duty. On its modelling, waiving those charges only shifts projects that were already close to the line. Deeply unfeasible projects stay unfeasible, and already feasible projects simply gain a windfall.
What moved in two years
Between 2023 and 2025 the total cost of delivering a mid rise apartment rose $132,000, or 14 per cent. Sale prices over the same period rose seven per cent. That divergence is the whole story of the margin compression.
Construction did most of the work, up $63,000 or 18 per cent. Parking rose $14,000. Financing rose $12,000. Land acquisition rose $11,000.
The financing line is worth sitting with. At $119,000 per dwelling it is now marginally larger than land acquisition on the Sydney average, and accounts for about 11 per cent of the total. CIE builds it from two holding periods: the land finance period, which runs from settlement of the site through to completion of the dwellings, and the construction finance period. Builders reading a feasibility model will recognise the shape of that from their own financing and land holding costs. Time is a cost line, not a scheduling inconvenience.
Costs rose 14 per cent. Sale prices rose seven. That is the squeeze, and no amount of approvals reform closes it on its own.
Seven storeys is not the cheapest way to build an apartment
The Commission asked CIE to model three heights rather than one. The result is the most commercially interesting finding in either document.
Total delivery cost per dwelling, Sydney 2025
Seven storeys (mid rise) $1,049,000
16 storeys (high rise) $982,000
26 storeys (very high rise) $1,115,000
Feasibility gap at each height
Seven storeys 5 per cent
16 storeys 12 per cent
26 storeys negative 1 per cent
The mechanism is straightforward once you see the components. Land acquisition falls from $113,000 per dwelling at seven storeys to $44,000 at 16 storeys, because the same site is spread across more apartments. Construction cost per dwelling rises over the same range, from $417,000 to $465,000. Up to about 16 storeys the land saving outruns the construction penalty. Past that it does not, and by 26 storeys construction has climbed to $582,000 and the project stops working.
That turning point has practical consequences. In parts of western Sydney sitting on the boundary between feasible and unfeasible, including Panania, Bankstown, Auburn, Carlingford, Epping and Wahroonga, the minimum height at which a project works at all is 13 to 15 storeys. In central Sydney areas with very high land values, including Millers Point, Haymarket, Surry Hills, Darlinghurst and Paddington, the minimum feasible height is also 13 to 15 storeys. Below that, on these numbers, nothing gets built regardless of what the zoning allows.
The $96,000 line nobody prices separately
Car parking adds $96,000 to the delivery cost of an apartment. The figure is built from an observed Sydney average of 1.2 spaces per apartment, being one resident space plus 0.2 visitor spaces, at $79,689 per space in 2025. That per space cost was escalated from a Savills estimate of $75,000 in 2024.
The number does not change with building height. It is $96,000 at seven storeys, at 16 and at 26. On a smaller building it is therefore a proportionally heavier load, sitting at roughly nine per cent of the total delivery cost of a mid rise apartment.
The Commission treats minimum parking requirements as a feasibility blocker and estimates the resulting oversupply carries a net cost to society of $264 million. It notes that NSW has already moved partway, with the Low and Mid Rise program allowing 0.5 spaces per dwelling and the City of Sydney setting a maximum rather than a minimum, and points to London, Victoria, Vancouver, Auckland, Portland, Minneapolis, Austin, Seattle, Buffalo, Connecticut and New York City as jurisdictions that have relaxed or removed requirements.
Construction is half the stack, and reform there is slower
Because construction and parking make up around half of total development costs, the Commission modelled what a 20 per cent cut in construction costs would do. The answer is that it would materially improve average feasibility, but still deliver less new capacity than upzoning the high demand parts of Sydney would.
The Commission is careful about why. Governments influence construction costs indirectly, through training, regulation and standards, and those levers act slowly. Planning rules are a direct lever. That is an argument about the relative speed of two reform paths, not a claim that construction costs do not matter.
It is also not an argument that regulatory cost reduction is pointless. The Commission explicitly calls for reforms that lower housing costs while maintaining safety standards and design quality, and NSW already has one in the parliament in the form of removing duplicated design approvals for apartment buildings.
It only stacks up east of Parramatta
The Sydney wide average of five per cent hides an enormous spread. Apartment development is generally feasible only east of Parramatta, with the strongest positions in the Eastern Suburbs, Northern Beaches, North Sydney and Hornsby, Sutherland, and the City and Inner South. In many of those areas the feasibility gap exceeds 50 per cent. West of Parramatta it is frequently negative. The five per cent average is a blend of both.
Since 2023, areas including the South West, Ryde, Parramatta, and Baulkham Hills and Hawkesbury have moved from feasible to unfeasible on this modelling. CIE also notes that apartment approvals are spread across areas with both positive and negative feasibility, which is part of the explanation for the gap between approval and construction that has defined the Sydney apartment market since 2020.
The Commission puts the current NSW figure at 12,870 dwellings approved but not commenced as at December 2025. It also notes, pointedly, that this sits below the 2017 peak and slightly below the long run average of 13,380, and that higher figures reported elsewhere often count development applications rather than building approvals.
The greenfield contrast
The same modelling covers greenfield houses, and the picture there is different enough to be worth a separate look. A Sydney greenfield house cost $890,000 to deliver in 2025, up from $753,000 in 2023, with construction costs up 28 per cent over the two years. But the feasibility gap is 33 per cent, down from 42 per cent but still comfortably positive. Detached housing on the fringe is under cost pressure like everything else in the Australian residential construction market, but it is not close to the line the way infill apartments are.
The Good Builder Take
Three numbers from this modelling are worth carrying into a feasibility conversation.
One. The cost curve by height is not a straight line. Around 16 storeys is where land savings and construction costs cross over, and that is where the cheapest apartment per dwelling sits. Anyone assuming taller always means dearer is working from the wrong shape.
Two. Parking is a fixed $96,000 regardless of height, which means it bites hardest on the smaller buildings that most low and mid rise policy is aimed at.
Three. The margin above the required 20 per cent has fallen from 13 per cent to five in two years, driven by costs rising twice as fast as prices. That is why approvals are not converting, and it is not something a faster approval pathway fixes on its own.
Frequently asked questions
On modelling prepared for NSW Treasury by the Centre for International Economics, the total cost of delivering one apartment in a seven storey infill building in Sydney was $1,049,123 in 2025. That figure covers construction, parking, land, financing, professional fees, contributions, taxes, sales and marketing, and a 20 per cent developer margin. It was $916,963 in 2023.
Per dwelling, a 16 storey building is cheaper. The modelling puts total delivery cost at $982,000 at 16 storeys against $1,049,000 at seven storeys. Land cost per dwelling falls as height increases because the site is spread across more apartments, and up to around 16 storeys that saving outweighs the higher construction cost per square metre. At 26 storeys the relationship reverses and total cost rises to $1,115,000.
About $96,000 per apartment in Sydney. That reflects an observed average of 1.2 spaces per apartment at $79,689 per space in 2025. The figure is the same at seven, 16 and 26 storeys, so it is proportionally heavier on smaller buildings.
Because approval and feasibility are different tests. A project can be permitted by the planning system and still not return the margin a developer or financier requires. On this modelling the average margin above the required 20 per cent has fallen from 13 per cent in 2023 to five per cent in 2025, and in large parts of western Sydney it is negative. NSW had 12,870 dwellings approved but not commenced as at December 2025.
Generally east of Parramatta. Feasibility is strongest in the Eastern Suburbs, Northern Beaches, North Sydney and Hornsby, Sutherland, and the City and Inner South, where the gap exceeds 50 per cent in many areas. It is frequently negative west of Parramatta, and areas including the South West, Ryde, Parramatta, and Baulkham Hills and Hawkesbury have moved from feasible to unfeasible since 2023.
Sources: Centre for International Economics, Cost and feasibility estimates for supplying new dwellings in New South Wales, 2025 Edition, prepared for NSW Treasury, 27 July 2026. NSW Productivity and Equality Commission, Building more homes where the numbers stack up, July 2026, published 29 July 2026. Parking unit cost derived by CIE from Savills 2024 and Rider Levett Bucknall Riders Digest 2025. Approved but not commenced dwelling counts from ABS Building Approvals as cited by the Commission.
Disclaimer: This article is general information only. It is not legal, financial, planning or investment advice. All figures are modelled estimates published by the sources cited and are averages across Greater Sydney, so they will not reflect the economics of any individual site. The sale price figure is a modelled average, not a market median. Recommendations by the NSW Productivity and Equality Commission do not become NSW Government policy unless explicitly adopted. Builders, developers and trades professionals should seek independent professional input relevant to their own circumstances before making commercial decisions.
Last updated: 4 August 2026.
Author: TGB Editorial
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