Apartment sales are improving across Australia, but investor sales are at their lowest levels since 2015 and the pipeline of completions is trending downward, says Urbis director Mark Dawson.
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Three key takeaways:
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Each Australian city is operating in a “different time zone” when it comes to apartment sale activity says Dawson.
“Markets weighed down by lockdowns will be buoyed by the encouraging results of those emerging and chasing the performance in states that have been able to operate with freedom and improving trading conditions.”
The pace of sales in Brisbane has almost doubled since the Olympics announcement, while Gold Coast has cleared between 42-56 per cent of available inventory each quarter of 2021.
Melbourne sales have been slow at five per cent over the third quarter of 2021, while Sydney’s high housing prices have propelled apartment sales to their highest level since 2017.
Perth has sold an average of 16 per cent of available inventory each quarter as the market gears up from a strong summer of project launches.
Percentage of available stock sold by quarter
The shift to larger spaces continues. Apartments with three bedrooms or more account for 27 per cent of sales, compared with just 15 per cent pre-pandemic.
“The actual size of each apartment type has been creeping up too,” driven by owner occupiers looking for extra space. The average two-bedroom, two-bathroom apartment has increased from 86 sqm to 91 sqm over the year, for instance.
The percentage of overseas buyers, once a major driver of the apartment market, has fallen from a peak of 29 per cent in 2016 to just five per cent in Q3 2021.
“This buyer pool has been significantly impacted by Covid induced restrictions on travel and inbound international students to Australia, along with foreign buyer taxes,” Dawson says.
Purchaser profile
Dawson flags the amount of rental stock when immigration resumes as a “major issue” for the market. Build-to-rent stock will fill some gaps. Urbis is tracking 72 build-to-rent projects and 16,895 apartments across Australia either proposed or built.
Nationally, the pipeline of completions has trended down in 2021, noticeably in Sydney and Melbourne.
“There are signs that the pipeline, while lower overall in the short term, will start to pick up as Sydney and Melbourne are unlocked and the Gold Coast, Brisbane and Perth markets continue to sell through current inventory.”
Supply may need to be “mobilised quickly” in response to increased immigration as border restrictions ease. “This is especially the case following a four-year period where the volume of launches, approvals and applications has been trending down across the country.”
Apartment approvals
“At this stage the supply over the next three years is forecast be at lower levels than has been seen in 2021. Rising pressure on construction costs is going to be one factor that limits supply going forward. However, as migration returns and population growth picks up it will be important that supply increases.”