Ask anyone who has tried to get an apartment project off the ground in Perth what decides whether it goes ahead, and most will point straight to construction costs.

Planning approval and presales are necessary, but are seldom the final hurdles. The question that ends most conversations is whether the numbers still work once the building has been costed, and in recent years those numbers have become much harder to make work.

That tension sits at the heart of the affordability debate. Most residents want to live near train stations, shops and jobs, and the case for building more homes in those places is strong.

But developers interviewed for the Australian Housing and Urban Research Institute’s latest report, Delivering well-located dwellings: opportunities and challenges, said medium and high-density projects in Perth largely stacked up only at the top of the market.

A project can be well located and fully approved and still fall short of its feasibility targets, leaving apartments unbuilt and the people who needed them still searching.

For builders, margins are already thin, and the cost of plastics, plasterboard and fuel is moving in ways that leave little room to absorb further increases.

Cotality’s latest Cordell Construction Cost Index showed costs still rising, with Western Australia recording the strongest quarterly rise of any state in the September 2026 quarter, at 1.1 per cent.

Falling values add pressure from the other side. Cotality’s Home Value Index for November 2026 showed Perth dwelling values down 5.7 per cent over the quarter, with the median Perth unit at about $692,000.

Lower prices might be expected to draw new supply back in, but a developer committing capital against a falling sale price, with costs still climbing, faces a widening gap rather than a narrowing one.

Developers can carry some of that burden for a while, but not indefinitely. The easiest way to close the gap is to sell the same apartment for more money, which protects the feasibility calculation but does little for the buyer or renter who needed the price to come down.

Affordability ends up decided by the cost of building, and raising prices shifts the problem on to the households it was meant to help.

Real progress requires lower delivery costs, which means the whole sector looking hard at how apartments are designed, procured and built.