National Apartment Essentials Insights Q4 2020

Across all markets, the majority of surveyed sales were to Owner-Occupiers. In 2020, 59% of surveyed sales were to Owner Occupiers, compared to 46% two years ago, and only 31% in 2016. The trend to Owner Occupier sales can be seen at a product level, with a greater number of three-bedroom apartments transacting. Nationally over 32% of surveyed sales were three-bedroom apartments, compared to only 13% of surveyed sales two years ago. 

Given their role in supporting volume, it will be interesting to see in the coming quarters whether improved conditions and tighter rental markets in Perth and Queensland entice investors.  This may take longer for Sydney and Melbourne as they seek to follow in the footsteps of more open markets in recovering activity levels in inner city areas. 

At this point, with a continued focus on stimulus, we have seen government, investors and affordable/key worker housing providers targeting unsold stock, bulk buying apartments or development opportunities to deliver affordable housing.  

Nationally, rents across new buildings have dropped by 16% since the same time last year (Q4 2019 vs Q4 2020) as a result of COVID. This reflects increased listing activity in the larger markets due to the impact of COVID on migration, tertiary students, and tourists.  

Rents stopped falling during Q4 2020. As the national COVID management situation has continued to improve, we have seen further stabilization. We anticipate the rental market to start seeing recovery in 2021 as CBD workplace utilisation increases and as people movement increases. However, the timing of international in-migration will have a major influence on the rate and extent of rebound in inner city markets in Sydney and Melbourne. 

Brisbane and Perth have emerged with more competitive rental markets, with lower vacancy rates and rental growth amid relatively lower listing volume. This has been supported by a net inflow of residents in recent months taking up stock, alongside greater freedom throughout the pandemic.  

Build-to-Rent has taken the spotlight in the Residential market nationally. The downturn in speed of sales and general economic climate have highlighted BTR as a positively defensive asset class. Mirvac’s LIV Indigo completed and began renting in Q3 2020, seeing good take-up throughout the remainder of the year. A wave of high-profile investments are to follow. 

New State Government policies in NSW and Victoria have been announced to support the sub-sector, further enhancing the prospect of additional projects, while government initiatives in Queensland continue to attract BTR development interest.  

• 56 BTR projects across our major cities, either at DA stage or approved for construction.  
• 13,920 apartments in this pipeline.
• Two and-a-half times the pipeline in 2016.  
• Only 0.4% of the Total Residential Pipeline 
• We estimate BTR could reach at least 1% of the Total Pipeline by 2024.

The Urbis Apartment Essentials survey collected sales results from 242 projects, representing a sample of 31,000 active apartments surveyed across Sydney, Melbourne, Brisbane, Gold Coast and Perth study areas. Additionally, there were 2,300 projects monitored across all stages of potential new supply including Build to Sell and Build to Rent projects either committed or in early planning. 

The Urbis Rental Intelligence Platform was updated with apartment listings to the end of January 2021, showing up to date impacts on new apartment rents.