Green shoots in the market for new apartments are set to appear in 2019 as declining levels of new supply and ongoing demand may lead to a shortage of stock, a leading consultancy for the built environment says.
In its latest report covering apartment markets across Sydney, Melbourne, Brisbane, Gold Coast and Perth, built asset and economics consultancy Urbis says Australia’s market for new apartments could begin to turn throughout 2019.
To be sure, the report found that current conditions are subdued.
In Sydney, whereas 21 percent of stock which was available for sale was sold throughout each quarter in 2017, that number dropped to 5.5 percent last year.
A similar pattern was observed in Melbourne and the Gold Coast, the report found.
With 24,000 new apartments launching in the year, meanwhile, Urbis says there has been an adequate supply of new stock to meet subdued demand.
But it said a downturn in new stock approvals could precipitate a supply shortage over the next twelve to eighteen months – especially when combined with lower volumes of completions in greenfield markets.
All up, only 4,576 new apartments were approved for construction over the final quarter of 2018 – a figure Urbis says is the lowest since it began producing its report.
With new design specifications and planning requirements in some jurisdictions, approvals could fall even lower in 2019, it said.
This, Urbis Director Clinton Oswald said, could precipitate a return to market undersupply.
“We need to keep an eye on supply levels as ongoing population growth, particularly on the East Coast, will quickly take up available supply,” Oswald said.
“This may result in a housing supply shortage in the next 12 to 18 months as we are also seeing fewer completions in the greenfield house and land market.”
The report also found that:
- Owner occupiers lead the way in purchases, snapping up 46 percent of new apartments in 2018. This was followed by interstate investors (19 percent), local state investors (17 percent) and foreign investors (17 percent.
- Sydney was the most expensive market, with an average selling price of $896,000. This was followed by Brisbane ($831,884), Gold Coast ($715,032), Melbourne ($656,739) and Perth ($602,534.)
- Across most cities, the most popular type of apartment features two bedrooms and two bathrooms. These make up between 41 percent of apartment sales (in Perth) and 68 percent of sales (in the Gold Coast). The only exception is Sydney, where one bedroom/one bathroom apartments are most popular and account for 48 percent of sales.
- All up, 49 percent of new apartments sell during construction whilst 25 percent are presales and 26 percent are newly built stock.