Apartment approvals dropped in the quarter, with 6,461 apartments approved, compared to 12,621 in the previous quarter. The first quarter of the year is traditionally slow for approvals, however, the Brisbane market registered the greatest drop in approvals, down from 2,686 in the previous quarter to 306 new approved apartments.
Across the nation, there are 47 projects yielding just under 5,800 apartments expected to launch in the next quarter, 37% of these are in Melbourne and 24% are in the Gold Coast. In the March 2017 Quarter, just under 6,800 apartments were expected to launch in the coming quarter.
The Gold Coast apartment market performed well in the quarter, with the recent Commonwealth Games stimulating project launches and the local apartment market. However, Mr Ostwald was interested to see how long the Commonwealth Games uplift would continue for as this market is likely to have benefited to the additional exposure.
The other market to register an increase in sales was Perth.
“Perth apartment sales were the highest level of sales recorded since the beginning of 2016. It really is a barometer of the Perth economy, post the mining boom the decline could be felt, however with the economy benefiting from a rise in mining sector investment to maintain its expanded capital asset base, this is flowing through to the local apartment market.”
Investor activity slowed in Brisbane, resulting in a drop in sales, however, the local owner-occupier market stayed strong, accounting for 34% of total sales. This quarter the majority of Brisbane sales (55%) were in the recently built product, only 15% of sales were in projects in a presales phase, compared to 46% in the previous quarter. This trend is in line with the slowdown in investor activity, with owner-occupiers interested in tangible product.
In Sydney, 29 projects commenced construction in the quarter, and there are now a total of 123 actively selling projects yielding over 24,000 apartments under construction. Additionally, 32 developments were completed in the March 2018 quarter. Only 49 of a total of 206 monitored selling projects are in a presales phase in Sydney, with the market being firmly in a delivery phase.
“As these projects move to completion, we will be keeping a close eye on settlement rates given the reduced level of funding being offered by the banks to investors,” said Mr Ostwald.
The middle ring in Melbourne continued to shine, with significant infrastructure investment making way for new areas. The future supply pipeline in the middle ring continued to grow, however, inner-city future development prospects slowed with the upcoming elections and competition from hotel and office development.
Mr Ostwald commented, “We are seeing a reduction in project launches nationally. Research such as this has been important in helping developers understand the market, and adjust their future project launches and product offering.
“There are still over 63,000 apartments under construction in actively selling developments nationally. The future delivery pipeline has slowed in line with the market, however, once current supply has been built it will be important to be ready for the next phase of the apartment market cycle.”