Australia’s apartment markets continue to lag in the country’s broader housing market recovery, reports have found, however momentum is building in Perth.
Australia’s apartment markets continue to lag in the country’s broader housing market recovery, reports have found, however momentum is building in Perth.
Released today, JLL’s latest National Apartment Market Report found while Sydney and Melbourne’s apartment markets were lagging general housing market growth, other cities, including Perth, were further into recovery, off the back of stronger local economic and population growth prospects.
“The strong general housing recovery has undoubtedly been driven by public sector stimulus measures and therefore is very driven by owner occupiers and focused towards detached housing,” JLL head of residential research Australia Leigh Warner said.
“Domestic and foreign investor demand remains much more subdued and this is keeping pre-sales demand for new apartments muted and seeing few new apartment projects commence.
“This is particularly the case in Sydney and Melbourne where the population impact of COVID-19 has been greatest and where there is more residual unsold stock in recently completed projects.”
JLL’s report noted that the recovery of Perth’s apartments market appeared to be quickly moving into full swing and leading most other markets nationally.
Demand for existing dwellings had picked up across the country and Perth had seen a clearer rise in new apartment demand, the report said.
“General confidence levels in Perth are riding high, which in part reflects record high commodity prices,” JLL valuation advisory director Craig Carroll said.
“Unit demand is undoubtedly lifting and developers are becoming much more confident that a sustainable recovery is now finally building.”
Similarly, Colliers International provided a positive outlook for Perth’s apartment market in its latest report.
For off-the-plan sales, buyers were growing in confidence, the report outlined, pointing to the strong increase in unit transactions over the past three quarters to March 2021.
Preliminary settlement data recorded 1,578 sales apartment sales over the March 2021 quarter– down from 2,088 dwellings in the December 2020 quarter.
Despite the lower number, the report noted the quarter still achieved sales that were 17.1 per cent higher compared to the previous year and that the volume for the March 2021 quarter was expected to be revised upwards as more settlement data becomes available.
“The deteriorating affordability of detached houses is driving more investors and owner occupiers into the medium and higher density market,” report author Quyen Quach noted.
“However, buyers remain somewhat cautious when it comes to off-the-plan apartments.
“The stock of unsold apartments in completed projects is being absorbed at a quicker rate than in previous years, as buyers seek to take advantage of the strengthening rental market.
“The ability for investors to purchase established stock allows and immediate rental return when compared to off-the-plan acquisitions.”
Those analyses of Perth’s apartment market also align with Urbis’ positive predictions in its latest report.
Rental vacancies increased during the quarter but remained low at 0.9 per cent, which Colliers said enabled median rents for units to increase 6.8 per cent to reach $390 per week.
That was in contrast to a near-$470 per week recorded in Sydney for the quarter, according to the Domain Rent Report.
Melbourne unit rents dropped to $375 per week for the quarter, which was the same median value Domain recorded for Perth’s rental unit market, rivalling Perth as Australia’s most affordable city to rent.
This level of affordability is replicated in Perth’s broader property market – despite having one of the strongest performing economies in the country.
