Apartment Market

<p><strong>EXPERT OPINION</strong></p>

<p>Multiple factors are driving our real estate markets but it can all be distilled down to this: we have shortages of everything.</p>

<p>Why are prices rising? Because there&rsquo;s a shortage of listings, relative to buyer demand.</p>

<p>Why are rents rising? Because there&rsquo;s a chronic shortage of rental properties.</p>

<p>Why are building costs rising? Because there&rsquo;s a shortage of everything and everybody involved in the creation of new dwellings.</p>

<p>Who&rsquo;s responsible for these situations? The politicians and bureaucrats who love to tinker at the edges of our property markets but never think beyond the press conference.</p>

<p>These shortages and their consequences create serious issues for Australians and they warrant urgent action. But there&rsquo;s no evidence that the politicians are even aware there&rsquo;s a problem.</p>

<p>[smartcode_project:default project_id=5328 project_image_fid=155359]</p>

<p>They&rsquo;re all obsessed with the pandemic and haven&rsquo;t noticed the multitude of tenants who can&rsquo;t find a rental property at any price or the prospective owners of a newly-built home who can&rsquo;t proceed because they can&rsquo;t find an available builder - or the one they have can&rsquo;t get the materials they need.</p>

<p>We have a serious undersupply of rental properties because investors have been discouraged by a series of decisions and policies by politicians and bureaucrats over the past five years.</p>

<p>Investors have been largely sitting on the sidelines and right now there are more investors selling than buying.</p>

<p>The shortage of rental properties is dire. Most postcodes across Australia now have vacancy rates below 1% and many are closer to zero than 1%.</p>

<p>[smartcode_project:default project_id=5559 project_image_fid=88243]</p>

<p>Anyone who makes a rental property available and stages an open house will have queues of applicants and people offering more than the asking rental.</p>

<p>That&rsquo;s why rents are rising. Those who react to the symptoms rather than the causes are calling for controls on rents, but that will make the problem worse, by further deterring investors who are an essential part of this equation.</p>

<p>Placing a cap of rentals is no help to desperate individuals and families who can&rsquo;t find a rental property at any price.</p>

<p>When it comes to building new homes, in desirable locations, there are crippling shortages of everything that forms part of the process. The first issue is getting your foot on a block of land. In many places, everything has been sold and it takes time for developers to create new supply of land that&rsquo;s ready to be sold.</p>

<p>If you do have a block of land with your name on it, the next issue is trying to find a builder who&rsquo;s not booked out for the next year or more.</p>

<p>[smartcode_project:default project_id=89720 project_image_fid=147504]</p>

<p>If you have a builder, it&rsquo;s highly likely they can&rsquo;t do the job any time soon because they can&rsquo;t get steel or timber or bricks. Supply chains have been disrupted by the heavy demand and by the pandemic.</p>

<p>This means the cost of building your home is rising by the week. A lot.</p>

<p>If you&#39;re fortunate enough to have a fixed price contract locked in, your builder has a massive problem because they may be forced to build the home at a significant loss because their costs are going through the roof, pun intended.</p>

<p>Having the cost and completion date locked into a contract is worth little if your builder goes broke in mid-project.</p>

<p>[smartcode_project:default project_id=102256 project_image_fid=163757]</p>

<p>Who caused this shemozzle? The idiot politicians who patted themselves on the back for bringing in the HomeBuilder handout, but didn&#39;t bother to consider the impact that would have on supply chains.</p>

<p>This has become a big problem for everyone in the market &ndash; consumers, builders, suppliers, selling agents, buyers&rsquo; agents, everyone.</p>

<p>It&rsquo;s all part of a dynamic mix of factors that is forcing up the price of real estate almost everywhere in Australia.</p>


Multiple factors are driving our real estate markets, but it can all be distilled down to this: we have shortages of everything



terryryder

Shortages of listings, rentals and approvals driving the property market: Hotspotting's Terry Ryder

<h2>EXPERT INSIGHT</h2>

<p>The exponential growth in prices in the past quarter isn&rsquo;t confined to the housing market &ndash; many apartment markets are also experiencing major uplift.</p>

<p>In putting together the upcoming Winter edition of The Price Predictor Index, I have been updating the median price data for every notable suburb and town in Australia, changing the figures from three months ago to the current data.</p>

<p>In so many cases, the uplift has been quite startling, indicative of the once-in-20-years property boom sweeping the nation. When median prices are showing double-digit increases in just three months, you know something exceptional is afoot.</p>

<p>[smartcode_project:default project_id=600 project_image_fid=13472]</p>

<p>A few weeks ago, I listed some examples of rises for median house prices in locations across the nation. But it&rsquo;s also occurring in many apartment markets &ndash; not as prevalent, but nevertheless noteworthy in individual instances.</p>

<p>On the Redcliffe Peninsula in buoyant Brisbane, several suburbs are recording big rises in median prices for apartments. The median price in Scarborough has increased from $480,000 to $510,000, while Redcliffe has jumped from $385,000 to $425,000 &ndash; a rise of 10.5% in three months.</p>

<p>The median unit price in the Brisbane northside suburb of Newmarket has risen 16% in the past quarter, from $400,000 to $465,000.</p>

<p>In Perth, examples of big increases in median unit prices in three months include Rockingham ($210,000 to $250,000), Maylands ($285,000 to $315,000), Dianella ($270,000 to $330,000), Fremantle ($475,000 to $510,000) and Joondanna ($310,000 to $385,000).</p>

<p>The Rockingham rise was 19%, Dianella jumped 22% and Joondanna&rsquo;s increase was 24%. But the biggest leap has been in Mosman Park, up from $285,000 to $385,000 &ndash; an increase of $100,000 or 35% in the past quarter.</p>

<p>[smartcode_project:default project_id=3490 project_image_fid=92411]</p>

<p><strong>What, you may wonder, is going on here?</strong></p>

<p>Adelaide has some notable examples. Norwood is up from $505,000 to $570,000 (13%) and Prospect has risen from $380,000 to $445,000 (17%). So does Canberra, including the 12% rise from $595,000 to $665,000 in Barton.</p>

<p>In Sydney, the median unit price in Fairlight has leapt from $1,425,000 to $1,560,000, Freshwater has gone from $890,000 to $940,000, Double Bay is up from $1,450,000 to $1,510,000, Neutral Bay from $955,000 to $1,050,000, St Ives from $1,020,000 to $1,120,000, and Kogarah from $685,000 to $785,000 (up $100,000 or 15%). Rose Bay has delivered one of the most remarkable results: its median apartment price has increased from $1,475,000 to $1,600,000 in three months &ndash; a rise of $125,000.</p>

<p>Melbourne has many notable instances, including Berwick (from $530,000 to $595,000), Beaumaris ($935,000 to $1,100,000) and Albion ($375,000 to $435,000).</p>

<p>There are lots of examples also in regional Australia, notably on the Gold Coast, the Sunshine Coast and the Central Coast, but also in regional cities like Newcastle.</p>

<p>One school of thought suggests we may see more big increases in apartment prices, because buyers priced out of the housing market in their favoured locations are switching their attention to more affordable apartments.</p>


The exponential growth in prices in the past quarter isn’t confined to the housing market – many apartment markets are also experiencing major uplift

Many apartment markets are seeing major price increases: Hotspotting's Terry Ryder

<p>Melbourne apartment values soared past the $600,000 median over May after&nbsp;0.8 per cent value growth, the monthly Hedonic Home Value Index&nbsp;from property data firm CoreLogic found.</p>

<p>The continued growth follows one per cent gains over April and 2.1 per cent in March.</p>

<p>The solid May performance takes the quarterly apartment gains across the Victorian capital to 3.6 per cent and the median apartment price to $605,000, well up from the $577,000 median at the start of 2021.</p>

<p>Apartment values in the Victorian capital have been rising since October, according to CoreLogic&#39;s data.</p>

<p><a href="https://www.urban.com.au/developments/melbourne-vic?source_news_article_id=102257&amp;ref=news_body_link"><img alt="" height="800" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/template_photoshop_melbournecbd_3.jpg" width="1200" /></a></p>

<p>CoreLogic&#39;s Head of Residential Research Tim Lawless reaffirmed the fundamentals driving strength in the housing market remain in place.</p>

<p>&ldquo;The combination of improving economic conditions and low interest rates is continuing to support consumer confidence which, in turn has created persistently strong demand for housing.</p>

<p>&quot;At the same time, advertised supply remains well below average.</p>

<p>&quot;This imbalance between demand and supply is continuing to create urgency amongst buyers, contributing to the upwards pressure on housing prices.&quot;</p>

<p>Melbourne is the only capital where total listing numbers are now higher than the five-year average.&nbsp; Unit listings were up over 29 per cent over the past year.</p>

<p><a href="https://www.urban.com.au/developments/docklands-vic?source_news_article_id=102257&amp;ref=news_body_link"><img alt="" height="800" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/template_photoshop_docklands_0.jpg" width="1200" /></a></p>

<p>Despite the increase in newly advertised residential properties across the country, sales activity has also increased. CoreLogic estimates sales activity over the three months to May was tracking about 37% higher than the five-year average.</p>

<p>&ldquo;The sales to new listings ratio remains around 1.1, meaning for every new listing there is more than one sale occurring,&rdquo; Lawless said,</p>

<p>&ldquo;This rapid rate of absorption is keeping advertised inventory levels extremely low, despite the rise in new listings. As a consequence, vendors remain in a strong selling position while buyers have a weak<br />
position at the negotiation table.&rdquo;</p>


CoreLogic's Head of Residential Research Tim Lawless reaffirmed the fundamentals driving strength in the housing market remain in place

Joel Robinson

June 2021: How did Melbourne apartment values perform over May?

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<p>CoreLogic research director Tim Lawless said 70 per cent of the best-performing apartment markets are located in lifestyle markets.</p>

<p>CoreLogic found 14 suburbs had seen 20 per cent growth in the past year.</p>

<p>Lennox Head on NSW's north coast topped the list with a 27.6 per cent increase in values.</p>

<p>The next biggest growth in values was in Victoria's Ocean Grove and Torquay, with 26.3 per cent and 25.8 per cent gains respectively.</p>

<p>Gold Coast suburbs Palm Beach, Bilinga, Currumbin and Tugun saw an average growth of 22.8 per cent. </p>

<p>[smartcode_project:default project_id=22057]</p>

<p>There was also strong demand in Brisbane's bayside suburbs Cleveland and Wynnum where apartment values up by 25.1 per cent and 18.6 per cent respectively.</p>

<p>Apartment values in Sydney's northern beaches suburb Avalon rose by 12.9 per cent.</p>

<p>Lawless noted the best-performing apartment markets were located in "lifestyle" markets, including tree change locations such as Bowral and Jindabyne.</p>

<p>[smartcode_project:default project_id=5559]</p>

<p>"The common theme for the strength in the unit market is the lifestyle factor, with additional demand from buyers looking for a sea change or tree change, as well as a lift in buyers seeking out holiday homes," he told The Australian Financial Review.</p>

<p>"Units obviously are still underperforming compared to houses but we are seeing some growth returning to the sector.</p>

<p>"I think because we've seen such strong price increases in detached housing, affordability constraints have become more challenging, so it's natural to look towards higher density options."</p>

<p><br>
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CoreLogic research director Tim Lawless said 70 per cent of the best-performing apartment markets are located in lifestyle markets

jchancellor

Lifestyle apartment markets lead recovery: Tim Lawless

<p>The Newcastle developer GWH has seen a spike in sales of their Newcastle CBD development Sky Residences since the start of 2021.</p>

<p>GWH sales and marketing manager&nbsp;Matthew Waddell puts it down to an increase in investor activity in the region, which posted 3.6 per cent dwelling price growth&nbsp;in March, second only to Sydney in price growth of major regions across the country.</p>

<p>"For this current quarter (January to March), we have seen more sales than any period during the marketing of the project", Waddell says.</p>

<p>There's been a dramatic increase in enquiry from investors, more specifically from investors outside Newcastle, Waddell notes.&nbsp;</p>

<p><a href="https://www.urban.com.au/new-apartments/sky-residences-509-hunter-street-newcastle"><img alt="" data-entity-type="" data-entity-uuid="" height="896" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/sky_residence_2.jpg" width="1200" /></a></p>

<p>Investors have accounted for 36 per cent of sales since the turn of the year at Sky Residences, just behind owner-occupiers who accounted for 38 per cent. And now over a third of those buying are coming from outside of Newcastle.</p>

<p>"Buyers are making their purchasing decision quicker as well, with a previous ratio of appointments to sales of 7:1 now shortening to 3:1", Waddell says.</p>

<p>[smartcode_project:default project_id=8430]</p>

<p>Set in the heart of the CBD's Civic precinct, Sky Residences,&nbsp;designed by DBI, homes 180 apartments, made up of one, two, three and four bedroom units.</p>

<p>There are 1,100 sqm of premium hotel-style amenities for residents, including a heated outdoor lap pool, gym and fitness centre and a rooftop sky lounge with 360-degree views across Newcastle. On the roof there's indoor and outdoor facilities, a landscaped lawn terrace, barbecues and dining spaces.</p>

<p><a href="https://www.urban.com.au/new-apartments/sky-residences-509-hunter-street-newcastle"><img alt="" data-entity-type="" data-entity-uuid="" height="894" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/sky_residence_3.jpg" width="1200" /></a></p>

<p>Inside there's a lounge area with a fireplace and a cinema screen and bar.</p>

<p>Remaining one bedroom apartments start from $485,000, with the highest remaining three bedders on level 16 for sale at $1.6 million. The north-east facing penthouse sold for $3.3 million.</p>

<h2><strong>About the developer</strong></h2>

<p>GWH have been developing property in the Newcastle region&nbsp;for over 25 years, with over $1 billion of completed projects&nbsp;delivered.</p>

<p>Led by Jonathan Craig, GWH are behind Aero in Newcastle, which won the Master Builders Association award for&nbsp;Apartment Development of the Year in 2018, Highpoint in Charlestown and 121Elder in Lambton.</p>


There's been a dramatic increase in enquiry from investors, more specifically from investors outside Newcastle.



Sales spike hits Newcastle's Sky Residences as investors return

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<p>The national home value index one per cent over December, pointing to a strong start to 2021, data analytics firm CoreLogic's monthly home value index found.</p>

<p>It was the third consecutive month of dwelling value gains after declines of -2.1 per cent drop in dwelling values between April and September.</p>

<p>Darwin again led the way in monthly gains over December, with dwelling values up another 2.3 per cent. They are 5.5 per cent up on the quarter in the Northern Territory capital and nine per cent up the calendar year, the best performing market across the country for 2020.</p>

<p>Darwin was followed by 1.1 per cent gains in Brisbane, Adelaide and Perth.</p>

<p>Melbourne was the other other capital to see gains of one per cent or above, with Hobart and Sydney recorded modest 0.7 per cent growth and Canberra the worst performer but still up 0.6 per cent.</p>

<p><img alt="" height="707" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic_january_2021.jpg" width="1200"></p>

<p>CoreLogic’s research director Tim Lawless said the year was characterised by a mild COVID dip in values, but unprecedented volatility in the transaction space.</p>

<p>“The number of residential property sales plummeted by -40% through March and April but finished the year with almost 8% more sales relative to a year ago as buyer numbers surged through the second half of the year," Lawless said.</p>

<p>Despite the volatility, housing values showed remarkable resilience, falling by only -2.1% before rebounding with strength throughout the final quarter of 2020.”</p>

<h2>Houses v Units</h2>

<p>The national housing market started its expected outperformance of its unit counterpart over December, with national average gains of 1.1 per cent over the month.</p>

<p>Unit values held firm however, seeing growth in every capital apart from Sydney.</p>

<p>Sydney's housing market did the heavy lifting for their 0.7 per cent dwelling value gains. Houses were up 1.1 per cent over December compared to a -0.1 per cent contraction in the unit market.</p>

<p>House values in Melbourne outperformed Sydney's, up 1.2 per cent. Their unit market growth was one of the best in the country, up 0.6 per cent, only bettered by Perth's 1.1 per cent gains.</p>

<p>It was a similar script in Queensland, with Brisbane home values up 1.2 per cent and unit values up 0.4 per cent.</p>

<p> </p>
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The national home value index price rose one per cent over December, pointing to a strong start to 2021, data analytics firm CoreLogic's monthly home value index found.



Every capital sees real estate value growth in December 2020: CoreLogic

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<p>SQM Research reported that listing numbers declined across every capital city in August, and August listings nationally down by 4.3 percent from the prior year.  </p>
<div>This is not unusual for August according to SQM, so we may see a rebound in September. </div>
<p><a href="/images/2016/09/08/SQM1.jpg" target="_blank">Click to enlarge </a></p>
<div class="separator"><img src="/images/2016/09/08/SQM1.jpg" alt=""></div>
<div> </div>
<div>Over the past year Hobart has been the one significantly tightening market with listings down by 7 per cent in August to be 10.7 per cent lower than one year ago. </div>
<p><a href="/images/2016/09/08/SQM2.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="/images/2016/09/08/SQM2.jpg" alt=""></div>
<p><br><span>Darwin listings seem to have stabilised, while this was a better result for Perth, though median asking prices are lower than one year ago in both of these resources capital cities. </span> </p>
<div>In Sydney total listings are 12.3 percent higher than one year ago.</div>
<div> </div>
<div>According to SQM's managing director, Sydney's inner ring has seen record year-on-year declines in listings, but outer suburban and older stock is not shifting leading to the annual increase in total listings. </div>
<div> </div>
<div>There has been much talk of an apartment corrections in the largest capital, but to date median asking prices are higher over the year in both Sydney (+5.2 percent) and Melbourne (+5.2 percent). </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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pwargent-M4siyDbqQY

Listings decline across the board: Pete Wargent

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<div>The latest population growth figures put an altogether different slant on Australia's assumed apartment gluts. </div>
<div> </div>
<div>In Melbourne, the risks have receded dramatically, at least for now.</div>
<div> </div>
<div>In fact, with the state's estimated populated growth apparently tracking at the highest level in six decades, it would be all but impossible for the market to become 'oversupplied' until this rate of growth in the headcount slows down. </div>
<div class="separator"> </div>
<div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/09/29/B2.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"> </div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/29/B2.jpg" alt=""></div>
<p> </p>
<div>Now Queensland <strong><span style="text-decoration: underline;">really</span></strong> went on an apartment construction mission from 2014 forth, to the extent that there is a now a clear oversupply of units in some locations, particularly inner city Brisbane, with more supply still to come online. </div>
<div> </div>
<div>The latest figures show that although the glut will have an impact for some time to come, the market will right itself eventually.</div>
<div> </div>
<div>Indeed, the reacceleration of population growth to +75,400 per annum is exactly what Queensland's housing markets needed to help absorb the stock, while new apartment starts are now understandably and visibly slowing to a crawl. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/29/B1.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/29/B1.jpg" alt=""></div>
<p> </p>
<div>In Hobart, commencements have yet to pick up dramatically, despite electric growth in house prices and rents.</div>
<div> </div>
<div>Because the Hobart market demands houses and not apartments, in theory the supply response should come much more quickly (apartment projects can take ages to build, comparatively speaking).<br><br>And we know from previous cycles that the market has the potential to deliver much greater supply - but to date it hasn't happened.<br><br>Developers from the mainland are not that keen to get involved, perhaps, given the logistical challenges.<br><br>I haven't been down to Tassie for a while - and I got seasick when I last went - so I have no feel whatsoever for activity on the ground. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">First homebuyer demand</span></strong></div>
<div> </div>
<div>I noted here previously that the 2016 Census confirmed an enormous surge in 25-34 year olds.</div>
<div> </div>
<div>Due in part to housing affordability challenges, many are not yet forming households, though they might begin to do so if capital city apartment prices do ever slide in any meaningful way.<br><br>
</div>
<div>ANZ research this week suggested that there is significant latent first homebuyer demand, and ANZ believes that this could potentially keep an effective floor under prices, which is what I concluded from the Census figures back in June too.</div>
<p> </p>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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j.ballantyne1990-6AQqhLzZaK

Australia's assumed apartment gluts

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<div id="post-body-1248243627302399679" class="post-body entry-content">
<p>Greater Brisbane's apartment construction boom totters on its last legs, with annual unit approvals crashing by 42 percent (so far), and developers struggling to sell out live projects. </p>
<p>There are still quite a number of significant projects under construction. </p>
<p>When finished, the project will comprise 360 apartments across the three residential towers. </p>
<p>On Old Cleveland Street, the old retail eyesore has gone, to be replaced with 7,000 square metres of new retail space, including cafés, restaurants, and a 10-theatre cinema precinct.</p>
<p>The final stage of the apartments has reportedly yet to sell out, despite being approved in 2014 and being located in a relatively prime location. </p>
<p>Over the medium term this will doubtless be a very popular location, but the appetite for new apartments has been sated for this cycle.</p>
</div>
<div class="post-footer"> </div>
<div class="post-footer">
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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Greater Brisbane's apartment construction boom totters on its last legs: Pete Wargent 

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<p>EXPERT OBSERVER</p>
<p class="p1"><span class="s1">I’m expecting uplift in apartment markets in the major cities as we transition into the New Year. It’s clear from the evidence that’s emerging week by week that the post-boom correction that afflicted Melbourne and Sydney has run its course and recovery is real.</span></p>
<p class="p1"><span class="s1">But, contrary to the general tone of mainstream media, there was no blanket collapse in price levels across the two biggest cities during that recent downturn. Some market sectors were strongly resistant.</span></p>
<p class="p1"><span class="s1">Generalised reporting, with a single figure to describe outcomes in an entire very large city, disguises the myriad scenarios playing out across a metropolitan area. At Hotspotting, we conduct a suburb-by-suburb analysis of sales activity and price trends every quarter and that shows how many variances there are. Even neighbouring suburbs can have contrasting fortunes. It’s fundamentally about local conditions.</span></p>
<p class="p1"><span class="s1">A trend I saw during that correction phase was numerous suburbs in both Melbourne and Sydney where median house prices were down (a lot, in many cases) but median unit prices were still up.</span></p>
<p class="p1"><span class="s1">As investors fell away, younger home buyers became increasingly active and there’s a preference among young adults for the apartment lifestyle, and not only because units are cheaper. Young adults are making choices that are different to those of their parents and grandparents, who generally opted for the suburban house on land.</span></p>
<p class="p1"><span class="s1">Apartments offer a low-maintenance low-energy lifestyle, often in a better-connected location at a cheaper price. So demand for apartments held up pretty well in the big-city downturn and prices stayed solid in many locations (not all).</span></p>
<p class="p1"><span class="s1">And now we have the brave new world of recovering or rising markets in our capital cities. We’re entering 2020 with real estate consumer confidence rising and buyers becoming increasingly active, helped by easier finance and tax cuts, and nudged along by a more positive tone in media coverage.</span></p>
<p class="p1"><span class="s1">First-home buyers are busy and, according to the ABS date, more prominent (measured by their share of owner-occupier loans) than at any time in the past 7-8 years.</span></p>
<p class="p1"><span class="s1">The Federal Government’s assistance package will add impetus – and urgency, because it’s limited to the first 10,000 who take action.</span></p>
<p class="p1"><span class="s1">So demand in big-city apartment markets is likely to strengthen.</span></p>
<p class="p1"><span class="s1">Here are some case studies.</span></p>
<p class="p1"><span class="s1">The Moreland LGA in Melbourne attracts a lot of demand from both renters and buyers, thanks in part to the proximity of the big medical/education precinct around Parkville/Carlton. Most postcodes have vacancies well below 2%.</span></p>
<p class="p1"><span class="s1">In the popular suburb of Brunswick, you pay close to $1 million for the typical house but the median price for units is a little above $500,000. In Coburg, the median prices are around $900,000 for houses and $500,000 for units. So you can get into the typical apartment for half the price of houses, generally speaking.</span></p>
<p class="p1"><span class="s1">In the past 12 months, the median house prices in both suburbs have dropped significantly, but median unit prices have increased – by 4% in Coburg and 6% in Brunswick.</span></p>
<p class="p1"><span class="s1">In the Northern Beaches area of Sydney, Dee Why attracts consistent demand for apartments, with over 500 unit sales in the past 12 months. The median prices are $1,530,000 for houses and $740,000 for apartments – and price levels have stayed solid for apartments while houses are down 9% in annual terms.</span></p>
<p class="p1"><span class="s1">In the Northern Beaches suburb of Newport, the median price comparison is $1,700,000 for houses and $860,000 for apartments, with house prices down 8% in annual terms, while apartment prices are up 4%.</span></p>
<p class="p1"><span class="s1">Another factor boosting apartment markets is the fall off in construction levels, which means supply levels have moderated at a time when demand generally is rising. Vacancy rates are low and falling in most of our capital cities, although there are exceptions and buyers need to be informed about local situations.</span></p>
<p class="p1"><span class="s1">In Kangaroo Point in inner-city Brisbane, you pay around $460,000 for the typical apartment and vacancies, which were consistently above 5% in recent years, are now down around 3%.</span></p>
<p class="p1"><span class="s1">A year ago, the vacancy rate for South Brisbane was around 8%. Now it’s around 4% and trending in the right direction. The median apartment price is around $500,000, up slightly in the past 12 months.</span></p>
<p class="p1"><span class="s1">I’m not advocating that people dash out and buy apartments – and we could have large debates about the pros and cons of investing in apartments, But I do think we’re going to see rising demand in unit markets in the major cities in 2020, especially by owner-occupier buyers, with first-timers prominent.</span> </p>
<p class="p4"><span class="s3">T<em>erry Ryder is the founder of hotspotting.com.au</em></span></p>
<p class="p4"><span class="s4"><a href="https://mailto:ryder@hotspotting.com.au"><em>ryder@hotspotting.com.au</em></a></span></p>
<p class="p5"><span class="s3"><em>twitter.com/hotspotting</em></span></p>
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