By Clinton Ostwald | 7 Jun 2018

In the most comprehensive national survey in Australia, we tracked over 120,000 brand new and off the plan selling apartments across Sydney, Melbourne, Brisbane, Perth and the Gold Coast in the March 2018 quarter, recording a total of 1,230 sales from 305 developments. Of the surveyed apartments nationally, 74% are now contracted for sale.

We monitored actively selling apartments across 862 inner-city developments nationally. Thirty-nine new projects yielding over 5,600 apartments launched in the quarter, and twenty-eight projects yielding over 4,400 apartments sold out in the quarter. In the same period last year, 67 projects yielding over 8,600 apartments launched.

Two-bedroom, two-bathroom apartments were the most popular selling product, accounting for 52% of total sales, similar to 51% in the previous quarter. However, in the same period last year, two-bedroom, two-bathroom apartments accounted for only 45% of total sales. One-bedroom apartments with and without a car park made up 26% of total sales compared to 33% in the same period last year.

Three-bedroom plus product also recorded over 14% of total sales, the highest proportion recorded in the last five quarters. In the same period last year, three-bedroom plus product recorded 11% of total sales.

National Director of Property Economics and Research, Clinton Ostwald said, “In Sydney, Brisbane, Perth and the Gold Coast, we monitor buyer profile information. Across all these markets, we have seen a preference for owner occupier or local state investor sales, which could be driving the increase in larger apartment product.

“With changes to foreign investor banking regulations, developers are starting to move away from investor stock, and are tapping into the local market.”

Sales decreased slightly in the quarter, down from 1,380 across inner and mid-regions, a reduction of 11%. However, this reduction was not felt nationally, with the Gold Coast and Perth markets registering an increase of 33% and 18% respectively.

“Though they may be our smaller cities they are by no means our least popular for apartment dwellers.

“In Perth and the Gold Coast owner-occupiers accounted for 42% and 65% of sales respectively, continuing the trend in the rise of the owner-occupier market,” said Mr Ostwald. 

In Brisbane, owner-occupiers accounted for 34% of total sales. The Sydney market was the only market to favour local state investors, who made up 43% of total sales followed by owner-occupiers (35%).

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.”

  • 1,230 sales were recorded in the March 2018 quarter across 33% of the national market:
    • Sydney (116 sales, 16% of market surveyed, market size 42,601 units)
    • Melbourne (272 sales, 19% of market surveyed, market size 49,939 units)
    • Brisbane (154 sales, 63% of market surveyed, market size 17,096 units)
    • Perth (410 sales, 88% of market surveyed, market size 11,249 units)
    • Gold Coast (278 sales, 75% of market surveyed, market size 6,065 units)
  • Weighted average sale price recorded at $727,691.
    • Sydney – $1,099,569
    • Melbourne – $665,873
    • Brisbane – $675,955
    • Perth – $681,829
    • Gold Coast – $729,856
  • The most popular product type was two-bedroom, two-bathroom product at 52% of total sales. Across the cities the highest selling product types were:
    • Sydney – Two-bedroom, two-bathroom apartments – 45%.
    • Melbourne – Two-bedroom, two-bathroom apartments – 43%.
    • Brisbane – Two-bedroom, two-bathroom – 58%
    • Perth – Two-bedroom, two-bathroom – 48%
    • Gold Coast – Two-bedroom, two-bathroom – 65%
  • 28% of actively selling apartments are in presales, 50% are under construction and 22% are recently built.
  • New project launches in the quarter:
    • Sydney – 6 projects, 2,177 apartments
    • Melbourne – 15 projects, 1,586 apartments
    • Brisbane – 3 projects, 146 apartments
    • Perth – 6 projects, 702 apartments
    • Gold Coast – 9 projects, 1,063 apartments