By Mark Dawson | 29 Mar 2018

In the most comprehensive national survey in Australia, Urbis tracked over 100,000 brand new and off the plan apartments across Sydney, Inner Melbourne, Brisbane, Perth and the Gold Coast, in the December 2017 quarter. 

Urbis’ Apartment Essentials survey recorded a total of 1,223 sales from 283 developments within inner-city regions and a further 157 sales from 18 developments in Melbourne’s middle ring. This is similar to the previous quarter which recorded 1,241 sales. Of the surveyed apartments nationally, 75% are now contracted for sale.

Urbis monitored actively selling apartments across 697 inner-city developments nationally. Thirty-four new projects yielding over 6,000 apartments launched in the quarter, and twenty-three projects yielding over 3,300 apartments sold out in the quarter.

Director of Property Economics and Research, Mark Dawson, said, “Nationally, across the inner precincts in 2017, 92 developments yielding almost 11,500 apartments sold out, and 128 developments yielding over 21,700 apartments launched. Whilst this may seem high, when compared to 2016 it is clear the market is self-regulating.”

In 2016, 248 projects launched yielding approximately 35,800 apartments, and 165 developments yielding 20,400 apartments sold out.

“There was a significant reduction in new project launches in 2017 compared to 2016, allowing developers to move existing stock whilst selected new projects launched without overcrowding the market,” Mr Dawson said.

Two-bedroom, two-bathroom apartments were the most popular selling product, accounting for 50% of total sales, compared to 47% in the previous quarter. One-bedroom, one-car park apartments were the next most popular product type making up 24% of total sales. Three-bedroom plus product recorded 12% of total sales, down from 13% in the previous quarter.

“Though there is some movement in product preference nationally depending on stock availability, the staple configurations of two-bedroom, two-bathroom and one-bedroom, one-car apartments remain consistently popular,” Mr Dawson said.

Owner Occupier sales dominated in the Gold Coast, Perth and Sydney markets, making up 54%, 48% and 51% of sales respectively. Inner Brisbane apartments are still primarily a product aimed at investors, and this was represented in the data with 43% of sales being to foreign investor buyers.

Of the 1,223 sales recorded across the inner-city regions nationally, 45% of them were to projects which were still in a presales stage. This was particularly high for Inner Melbourne, where 75% of sales were in projects still in a presales stage.

“Though launches have slowed. the appetite for quality new apartment product is still there, and with the right mix of product, price and marketing, developers can successfully launch new developments to the public” Mr Dawson said.

Apartment approvals remained steady in the quarter, with 8,604 apartments approved, compared to 8,589 in the previous quarter. Just under 15,000 apartments were approved in the same period last year.

The number of apartments in application and approval remained similar to the previous quarter at approximately 129,000.

Sydney has the largest active market with over 42,000 apartments monitored as part of the Urbis Apartment Essentials.

“Sydney’s North West Middle Ring and Parramatta are expected to see greater activity in the coming quarters. Paramatta has seen substantial recent investment in infrastructure, and key centres such as North Ryde and Macquarie Park will continue to push growth in the North West Middle Ring.” Mr Dawson advised.

Both Perth and the Gold Coast markets experienced an increase in sales in the quarter, of 26% and 37% respectively.

Mr Dawson suggested, “In Perth, confidence in the local apartment market is improving after the recent market downturn. Completed stock levels are reducing which will aid in the Perth apartment market recovery.

Amid the talk of supply impacts across the country, it is interesting to see that a project from each of the capital cities makes up the top 5 fastest selling projects in the quarter.

“On the Gold Coast, sales have increased this quarter and we have seen growth in pre-development activity. The excitement and attention of the Commonwealth Games are flowing through to confidence in the local apartment market, and we are expecting new project launches and sales to increase.”

In Brisbane, project launches are expected to remain low throughout 2018, which will allow for the absorption of unsold product.

“Whilst not coming through in the sales numbers, Brisbane has a number of strong fundamentals. Population growth is on the up, investment in major projects is kicking up a gear and the rental market has remained buoyant to this point helping to absorb the significant supply entering the market.

“The new apartment vacancy rate was 3.6% in the December quarter according to the Urbis Inner Brisbane Apartment Rental Review, compared to a 4% vacancy rate registered for houses and units by the REIQ. Additionally, there was a 21% increase in unit bond lodgements for Inner Brisbane over the past 12 months,” commented Mr Dawson.

Mr Dawson added, “Melbourne’s middle ring will continue to emerge with growth inactivity, with well-priced and well-connected projects selling well. There is significant talk around the Build to Rent model, particularly in Melbourne. How this impacts the national apartment market is a space we are keeping our eye on.

“Amid the talk of supply impacts across the country, it is interesting to see that a project from each of the capital cities makes up the top 5 fastest selling projects in the quarter.”

What’s ahead in 2018 for the inner-city apartment markets? In this video, Director of Property Economics Paul Riga provides an outline for New South Wales, Victorian, Queensland and Western Australian markets. 

Our team of experts have the answers. Contact our Property Economics and Research team to find out more.

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