2023-10-23-莱坊-Australian_New_Apartments_Review_Q3_2023_7页_1mb

Australian New Apartments Review Summary (Q3 2023)

Core Content

The Australian New Apartments Review Q3 2023 by Knight Frank provides an analysis of the high-density residential market and new apartment supply across Australia. It highlights the challenges developers face, the impact of construction costs, and the dynamics of the rental market.

Main Points

New Apartment Supply

• Supply remains low: New apartment completions are sparse due to prolonged delays in project planning and construction, exacerbated by supply chain issues and border closures.
• Delays in delivery: The average time from approval to completion of a high-density apartment project is now 3.3 years.
• Future projections: The average number of new apartments built annually is expected to decrease to 35,500 over the next three years.

Site Sales and Prices

• High-density site sales: 82% of site sales in the year to June 2023 were for high-density residential development, up from 64.5% five years ago.
• Site value decline: High-density residential site values fell by 0.5% over the past year, with some cities experiencing sharper declines:
  • Greater Hobart: -12.5%
  • Greater Darwin: -10%
  • Greater Melbourne: -8.5%
  • Greater Sydney: -2.1%
  • Greater Perth: -1.2%
• Stable prices: Site values in Greater Adelaide increased by 20%, and Gold Coast and Greater Brisbane also saw growth.

New Apartment Prices

• Price growth: New apartment prices rose by 5.7% annually in the year to June 2023, outperforming the 1.3% decline in established apartment values.
• Regional performance:
  • Greater Adelaide: +13.8%
  • Gold Coast: +11.1%
  • Greater Sydney: +7.4%
  • Greater Melbourne: +3.0%
  • Greater Brisbane: +3.2%
• Prime luxury market: The top 5% of new apartments by value saw a 7.1% price increase, reflecting continued demand despite financial constraints.

Construction Costs

• Rising costs: The cost of construction increased by 7.1% in the year to June 2023.
• Standard finish: Ranged from $2,635/sqm to $3,525/sqm (plus GST).
• Prestige finish: Ranged from $3,690/sqm to $5,065/sqm.

Rental Market

• Vacancy rates: The weighted average total residential rental vacancy in June 2023 was 1.5%, with most major cities below the 3% balanced market level.
• Rental growth: Median apartment rents rose by 5.8% in the June 2023 quarter, and 22.2% annually, reaching $550/week.
• Gross rental yields: Increased by 13 bps to 4.92%.

Key Information

Developer Activity

• Approval decline: Building approvals for apartments dropped by 10.3% from June 2022 to June 2023, with 69,203 apartments approved.
• Lower appetite: Developer activity remains lower than the 109,164 approvals recorded five years ago.

Market Trends

• Pipeline: Over the past five years, 217,500 new apartments were built, with an average of 40,800 per year.
• Forecast: The pipeline is expected to average 35,500 new apartments annually from 2023 to 2025.

Economic and Population Context

• Economic growth: Australia’s annual economic growth was 2.1% in 2022, with a forecast of 2.9% in 2025.
• Population growth: Population increased by 1.2% in 2022, with a forecast of 1.4% in 2025.
• Cash rate: The official cash rate target is 4.10% as of September 2023, with a forecast of 3.40% in 2025.

Summary of Statistics

Challenges and Outlook

• Affordable housing shortage: The undersupply of affordable housing remains unresolved, with private rental stock still low due to reduced investor interest following mortgage rate increases.
• International investors: Still face high entry barriers, limiting their participation in the rental market.
• Future outlook: While the downward trend in site sales and prices is easing, the market is expected to remain in a low-supply, high-demand environment, leading to pressure on rents and limited availability.

Conclusion

The Australian new apartment market continues to face supply constraints, rising construction costs, and a shortage of affordable housing. Despite these challenges, demand remains strong, particularly in cities like Greater Adelaide, Gold Coast, and Greater Brisbane, which have shown positive price growth. The rental market is tight, with vacancy rates below the balanced level, and developer activity is still recovering from the impact of past disruptions. The forecast indicates a potential increase in supply over the next three years, but rental pressures are expected to persist.