Western Sydney is increasingly becoming a no-go zone for apartment developers, thanks to skyrocketing infrastructure levies. As AFR reports, some local and state charges are now approaching $100,000 per unit in new suburbs, pushing major players away from the city’s outer west.
Margin Pressures Force the Shift
Developers are migrating toward inner-city areas where contributions are lower and property prices stronger. ALAND, which has delivered over 4,000 apartments historically, says projects in the west are no longer feasible. Andrew Hrsto laments the pullback: “We’re moving close to the city … we just can’t keep doing it.”
To illustrate: a North Sydney development faces about $34,400 in levies per unit, or ~1% of the unit’s value. But in Leppington, the figure jumps to nearly $96,700, representing ~14% of the projected sale price. The burden is unsustainable for many projects.
Supply Crunch Becomes Reality
The statistics back the claims. Only 5,310 apartments are currently under construction in Western Sydney, while the region needs about 24,178 new homes yearly to keep pace with demand.
Meanwhile, approvals are not translating into builds: in FY25, 15,773 dwellings were approved, yet just 5,369 are under way.
Alternative Models & Growth Nodes
Some sectors are proving more resilient. The build-to-rent pipeline is surging: NSW alone has 5,335 units under construction and 16,690 in the pipeline, with 2025 forecast to be a second record year for delivery.
Also, new precincts are emerging as potential catalysts for western Sydney’s growth. Granville is being tipped as a future hotspot thanks to transport upgrades and proximity to Parramatta.
Escalating Costs Add Fuel to the Fire
It’s not just levies. Construction cost escalation shows no sign of easing until at least 2028. Developers are facing a tightrope: absorb more cost, raise sales prices (risking market resistance), or walk away.
Governance Imperative
Local councils and state entities must reconsider the burden of infrastructure charges in growth zones. Without better cost-sharing or forward funding of key services, outer suburbs risk stagnation while inner-city precincts absorb most of the development activity.
