Rental developers are hitting pause despite a record building boom
The gap shows up most clearly in the outlook numbers. Of the 110 developers, owners, investors and housing providers surveyed between May 28 and July 13, only 37% were optimistic about rental feasibility over the next five years, and 49% were negative.
Looking beyond five years, optimism rose to 53% and negative sentiment fell to 19%.
“Developers remain confident in the long-term need for purpose-built rental housing but increasingly question the feasibility of delivering projects in the current environment. The widening gap between long-term opportunity and short-term viability suggests that project economics, rather than demand fundamentals, are becoming the primary constraint on new rental housing supply,” the report said.
How are rental developers responding to rising costs?
Beyond shelving projects, 54% said they had raised rents, 44% had extended timelines and 44% had reduced unit sizes. Just 23% reported cutting material quality.
“Developers appear more inclined to delay or increase rents than to compromise on construction quality, which ranks among the less common responses. This suggests cost pressures are translating largely into deferred supply and higher rents rather than changes to product standards,” the report said.
