The credit freeze sees apartment prices ease – but for how long?

“The national apartment market will continue to see lower sales volumes with a less consistent flow of new apartment marketing launches, buyers sitting on their hands and banks slowing the credit flow to developers, resulting in fewer construction commencements.” said Mr Ostwald.

The tightened controls on purchasers and lenders started to thin the purchaser market 18 months ago.  Since then, purchaser demand has remained on an even keel, but with more activity being funnelled to the more affordable end of the market, with owner occupiers taking up a large share of the market.

Some premium sites continue to defy the rest of the market, with appetite for amalgamated large apartments in the best locations continuing to attract high prices.

A continued challenge for the industry will be how to deliver on affordability as construction costs continue to rise and supply starts to recede amid competition from other land uses in the short term.

“While the market won’t be picking up in the short term, the reducing volume of new dwelling completions despite ongoing population growth, may result in an under supply of new housing within the next 12 to 18 months. A shortage of supply in high growth locations combined with improving rental yields for investors will be the catalyst for the market to start to show signs of improvement.” Mr Ostwald stated.

We have already seen from the projects we survey, that despite the slow and steady flow of sales, the pool of available apartments in the market at the end of each quarter is smaller than it was 18 months ago. As demand chips away at available stock, approvals continue to decrease, and we see a more staggered flow of launches, this leaves the door open for improved sales conditions in future.

While sales remained low in most parts of the country, the Gold Coast recorded strong sales in quarter three, continuing the impressive streak it has held onto for the entire year.

“This time last year, the Gold Coast scraped in with 139 surveyed sales, and now it has more than doubled with 298 recorded in the quarter. For the smallest market of only 6,806 apartments in the pipeline, sales to owner occupiers have been the highlight.” Mr Ostwald said.

Brisbane experienced a modest boost in sales during the quarter, however the process of securing these sales was a longwinded battle for marketing agents, who advertised months in advance prior to launch.

Off-the-plan sales continued to dominate, making up 46% of total sales in quarter three, while projects under construction saw 37% of sales. Perth bucked the trend with a preference for built product, accounting for 46% of sales in the quarter and apartments under construction took precedence in Melbourne with 64%. 

With fewer investors in the market, owner occupiers are wanting to see the product they are buying, which, along with a longer selling period explains the shift in sales timing.

Melbourne once again experienced a new low regarding the volume of apartments approved in the quarter, with 811 apartments approved well down from 3,850 in the previous quarter and a fragment of the 10,391 approved in Q2 2017.

1,320 sales were recorded in the September 2018 quarter across 28% of the national market:

• Sydney (46 sales, 13% of available surveyed developments, market pipeline 58,195 units)
• Melbourne (330 sales, 17% of available surveyed developments, market pipeline 63,892 units)
• Brisbane (420 sales, 57% of available surveyed developments, market pipeline 16,033 units)
• Perth (236 sales, 82% of available surveyed developments, market pipeline 11,206 units)
• Gold Coast (298 sales, 73% of available surveyed developments, market pipeline 6,806 units)

Weighted average sale price recorded at $687,057.

• Sydney – $833,152
• Melbourne – $600,558
• Brisbane – $736,065
• Perth – $635,805
• Gold Coast – $727,685

The most popular product type was two-bedroom, two-bathroom product at 50% of total sales. Across the cities the highest selling product types were:

• Sydney – Two-bedroom, two-bathroom apartments – 39%
• Melbourne – Two-bedroom, two-bathroom apartments – 34%
• Brisbane – Two-bedroom, two-bathroom 51%
• Perth – Two-bedroom, two-bathroom – 57%
• Gold Coast – Two-bedroom, two-bathroom – 61%

46% of actively selling apartments are in presales, 37% are under construction and 16% are recently built. 

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