Capital city apartment development splits into ‘a tale of 2 markets’

Urbis’ latest Apartment Essentials report has revealed that 1,112 sales were recorded over Q2 2024, with an increase in sales for more affordable apartments, particularly in Sydney and Melbourne. In Queensland, however, it was a different story, with developers catering to interest in high-end, luxury properties.

The urban planning consultancy surveyed over 162 apartment projects nationwide, from presales to newly built, and found the average presales and construction price for apartments in Q2 2024 to be $1.3 million.

Brisbane’s average presales and under construction apartment price of $2.2 million registered by far as the highest in Q2 2024, while the Gold Coast market followed closely behind at $1.8 million.

With Sydney’s average apartment price of $1.1 million ranking third and significantly lower than the two Queensland markets, Urbis highlighted the increased luxury products up for sale in the Sunshine State in contrast to the higher proportion of one-bedroom apartments sold in Melbourne, Sydney and Perth.

Director at Urbis, Paul Riga, described this disparity as a “tale of two markets”, where Sydney and Melbourne’s top selling projects have skewed “more affordable”, while the “Brisbane and Gold Coast markets are still targeting the luxury/premium market”.

Owner-occupiers out-buy investors

The report also found that owner-occupiers continue to express strong interest in the off-the-plan apartment market over Q2 2024, with foreign investor demand remaining comparatively subdued.

This persistent demand among owner-occupiers resulted in the demographic dominating surveyed sales, where in Sydney, Melbourne and Inner Brisbane the owner-occupier rate ranged from 70 per cent to 80 per cent.

Owner-occupier sales in Perth and on the Gold Coast were slower, accounting for 48 per cent of total sales.

Urbis noted that in Perth, the high proportion of investors was primarily motivated by interest in one specific project as opposed to being indicative of the broader market.

Off-the-plan prices rise

Urbis also reported that the price per square metre for presales and under construction apartments “continued to pick up the pace” and registered as just over $14,000 nationally in Q2 2024.

The divergence of the Queensland markets was again evident through Inner Brisbane and the Gold Coast’s status as the two most expensive markets, with prices of $18,000 and $17,000 per square metre respectively.

Development in Sydney has particularly concentrated in the western suburbs, where Riga highlighted the increased infrastructure and opportunity to “deliver affordable apartments with greater connectivity”.

Rental growth trends upwards

Urbis’ Rental Intelligence Dashboard, which monitors rents from 19,000 listings across approximately 1,700 projects, revealed continued rental growth in Q2 2024 even as reports suggest that rental growth has already begun to moderate.

The national average weekly rent for a completed existing apartment in Q2 2024 registered as $700, with the most expensive market of Sydney ($800 per week) followed closely behind by the Gold Coast ($798 per week).

Nevertheless, rental growth was observed to be occurring at a slower rate, with the 7 per cent national rental growth over 2023 to Q2 2024 falling short of the 20 per cent rental growth recorded from 2022 to 2023.

“Rental growth for new apartments was stronger in the quarter for Sydney and the Gold Coast lifting the national number. However, we are seeing rental growth moderate in Inner Brisbane, Melbourne and Perth,” Riga concluded.