After several challenging years, Melbourne is once again a city on the rise. For the last three years, when anyone interstate asked about Melbourne’s off the plan apartment market, the answer was always difficult. The short version? Not great. The longer version only raised more questions than it answered.

The roots of the downturn can be traced back to the start of the pandemic. At the end of 2020, Melbourne was the second most expensive capital city in Australia, a position it had held for decades. But while COVID-19 triggered a property boom in nearly every other capital, Melbourne lagged behind. Many blame the local government's handling of lockdowns, which stalled any real market momentum.

Then came the Reserve Bank’s aggressive rate hikes, taking interest rates from historic lows to 10-year highs within just 18 months. Other cities powered through thanks to their resilience during the pandemic, but for Melbo​urne, it was another blow.

The third hit came in the form of increased land tax, including new flat-rate charges and additional levies. Holding property became less viable for investors, especially with higher mortgage repayments. Many sold off their assets, flooding the market with investor-grade stock and pushing prices even lower.

Melbo​urne needed a turning point. That came in early 2025, when the long-awaited RBA easing cycle finally began, later than many economists had predicted, but still significant.

Despite the downturn, Melbou​rne’s fundamentals remained strong. One of the key growth drivers is supply versus demand, and the balance has shifted dramatically. According to Charter Keck Cramer, only 4,800 apartments were completed in Melbo​urne last year—a 36% drop from 2023, and less than half the 10,000 completed in Sydney. Only 6,320 apartments are currently under construction, compared to 21,550 in Sydney.

At the same time, Melbo​urne is expected to be the fastest-growing capital city over the medium to long term, with forecasts of more than 100,000 people moving to the city annually until 2029. With supply far below demand, price growth becomes inevitable.

So why haven’t prices already surged?

It’s not just buyers who’ve been impacted, developers have, too. Build costs have risen sharply, with labour and materials up around 40%. Land prices have also increased, along with holding costs. Higher costs mean higher sale prices. Developers aren’t charities, they’re not going to take the risk and lose money.

This created a stalemate: buyers couldn't afford the new prices, and developers couldn’t lower them. But 2025 has brought renewed optimism. Property values are now climbing in both the unit and house markets. Clearance rates have lifted into the mid-60s to low-70s—up from the low-to-mid 50s just last year.

With falling interest rates, buyers can now borrow more, while developers are feeling more confident thanks to stronger sentiment and stabilising build costs—though prices are unlikely to drop.

The future remains uncertain, but there’s a lot to like about Melbo​urne’s current position. The market has clearly bottomed out. We’ll inevitably be proved right or wrong, however it feels like this is arguably the best opportunity to buy in Melbourne—a city with significant business, large infrastructure projects all over the city, and a nightlife culture unrivalled anywhere in Australia.

Joel Robinson

Is Melbourne the city of opportunity in the property market?

Melbourne's housing supply could see a significant boost through strata reform, according to new research by Urbis.

The study identified over 1,000 strata sites within a 15km radius of Melbourne's CBD that could collectively deliver over 100,000 additional dwellings.&nbsp;

Urbis utilised spatial data to locate all strata developments within <a href="/developments/melbourne-vic">15km of Melbourne CBD</a> with more than one property/lot present and an existing address pre-2010. &nbsp;

[smartcode_project:default project_id=107714 project_image_fid=227201]

The study identified all lots with zoning that allows for residential use and calculated the potential additional dwelling capacity based on current planning controls.&nbsp;

The research found that the underlying land value of these sites exceeds the value of the existing strata titled lots. &nbsp; 
This indicates a significant opportunity for redevelopment and uplift in the housing supply.&nbsp;

"Repositioning underdeveloped strata sites has the potential to deliver a much-needed uplift in well-located housing supply," said Mark Dawson, Director at Urbis.&nbsp;

"Notably, around half of this dwelling uplift is located within the <a href="/developments/melbourne-vic-3000">City of Melbourne</a>. With over 140,000 &nbsp;key workers employed within the City of Melbourne, additional housing supply close to employment centres would provide critical relief to those who often need to live close to where they work."

[smartcode_project:default project_id=3260 project_image_fid=218718]

The research also highlights the need for legislative reform to facilitate these changes. Urbis suggests amendments to the Owners Corporations Act 2006 to allow for a collective sale with a 75 per cent consensus and the introduction of legislation similar to the NSW Act - Strata Schemes Development Act 2015.&nbsp;

Urbis Director, Alex Nunn, said the&nbsp;State's ambition to deliver 70 per cent of new housing in infill areas is well-supported by this strata reform.

"Measures that align and amplify proposed policy to unlock housing supply within the inner and middle ring are highly welcomed," Nunn said.

"The liveability and demand for housing in these localities has been proven over the years and ageing strata developments occupy some of the most sought-after real estate in Victoria."

Urbis concludes that strata reform could unlock significant housing supply in <a href="/developments/melbourne-vic">Melbourne's inner and middle rings</a>, aligning with the State's infill housing supply goals and providing much-needed housing for key workers.

"The State's ambition to deliver 70 per cent of new housing in infill areas is well-supported by this strata reform."

Strata reform could trigger 100,000 new dwellings in Melbourne: Urbis

Dwelling approvals in Western Australia have shown signs of improvement, but this growth in housing supply is unlikely to have a great effect on property prices.

That's the view of Resolve Property Solutions buyers agent, Peter Gavalas.

“There’s been a marked increase in dwelling approvals over the past few months, but this was coming off a low base,”= Gavalas says.

“We still have a significant supply deficit in <a href="/new-apartments/perth-wa">Perth</a> compared to population growth.”

The latest Australian Bureau of Statistics (ABS) data shows a 19.6 per cent improvement in total dwelling units approved between April and May 2024.

[smartcode_project:default project_id=142314 project_image_fid=263304]

Gavalas says population growth remains a key driver.

"Perth has seen significant population increases over the past few years, largely due to its relatively affordable cost of living and economic opportunities compared to other major Australian cities."

Western Australia’s population growth is fueled by interstate migration and a flourishing economy. The state recorded the largest population growth in 2023, up 3.3 per cent, according to the ABS.&nbsp;

“This influx of people continues to outpace the number of new homes being built, maintaining high demand for housing and will continue to do so,” Gavalas added.

Perth has a projected annual growth rate of 1.4 per cent over the next decade, according to the Centre for Population.&nbsp;

Another barrier for new homes is the cost of construction.

"Construction costs have soared, driven by a combination of material price hikes, interest rates and labour shortages," he said.

[smartcode_project:default project_id=142314 project_image_fid=228352]

CoreLogic’s latest residential construction costs analysis shows that, despite a slight improvement in costs, it is still around 30 per cent more expensive to build or renovate now than pre-Covid.

“This is translating into new builds being priced out of reach for a large segment of the market."

Adding to the situation is the fact that the pool of established homes being listed for sale is also smaller. In June 2024, total listings were down 32.2% across Perth, according to SQM Research.&nbsp;

"Homeowners are holding onto their properties, partly due to the uncertainty in the market and the difficulty in finding a new home once they sell. This reduces the overall availability of housing and further intensifies competition among buyers,” he said.

“With fewer homes available for purchase, and little in the way of new builds, it’s no wonder there has been such upward pressure on property prices over the last year.”

[smartcode_project:default project_id=142314 project_image_fid=263312]

Prices in Perth grew 23.6 per cent in the 12 months to June, according to CoreLogic.

But, despite its housing struggles, Gavalas said Perth is still a desirable location for buyers, thanks largely to its affordability. "Compared to the eastern capitals, Perth remains relatively affordable. This continues to attract buyers who are after better value for their money."

This sustained demand from buyers plays off against the slow pace of new supply and the high costs associated with construction.&nbsp;

"Even with more approvals, it would still take time before these properties were built, which means Perth’s supply shortage is unlikely to be solved anytime soon. For this reason, price growth in Perth is unlikely to flatten out in the near future,” he said.

Perth’s housing supply might be improving, but it's still lagging population growth

The shortage of new apartments in Melbourne has been well-documented in the last 12 months.

It's proving more difficult than anywhere else in the country to develop new projects.&nbsp;

Charter Keck Cramer Associate Director, Ben Carter, says&nbsp;the least discussed issue is how the cost of development is shaping the unit mix of the apartment supply pipeline.

"Charter Keck Cramer has observed, and in certain cases advised for, a reduced proportion of one-bedroom accommodation within upcoming apartment developments in Melbourne," Carter says, adding that the&nbsp;central constraint is the price ceiling of one-bedroom apartments and the associated inability to offset higher project costs.

"In short, prices of one-bedroom apartments cannot be increased to the same degree as other configurations due to the generally limited financial capacity of the purchaser and the ultimate rental value if intended for an investment," Carter suggests.

However, Charter Keck Cramer is expecting Melbourne’s established unit market will continue to recalibrate upwards over the next 12 months. With the upward&nbsp;recalibration, that will see the price gap between new and established apartments narrow, they anticipate an "elastic response in demand" for off the plan one-bedroom apartments at higher price points.

"At present, the gap between the price of off the plan one-bedroom product close to a project’s required blended rate (around $14,000 per sqm) versus established one-bedroom (and in some cases two-bedroom) units is too large to attract widespread purchaser demand," Carter says.

"Until such a time that pricing in the established market increases, the feasible delivery of one-bedroom apartments at higher values will remain challenged for many BTS projects."

Carter says in the meantime,&nbsp;projects that are well positioned to deliver competitively priced and well-designed one-bedroom apartments are expected to be met with market acceptance from a variety of purchasers and face little competition from new supply.

There is likely to be an increase in demand for one-bedroom apartments in the medium to long term, given more than 30 per cent of lone-person households&nbsp;occupy one-bedroom apartments across Melbourne.

"Assuming this propensity remains equal (which is conservative), this would equate to a need for an additional 30,000 one-bedroom apartments across metro Melbourne by 2031. By the same logic, couples will drive demand for an additional 20K one-bedroom apartments."

Carter says many recent projects are targeting downsizer purchasers with premium quality two and three-bedroom apartments that carry lofty price tags which leaves younger purchasers out in the cold.

"For younger purchasers, one-bedroom apartments often represent an affordable housing option in a less affordable location. This allows them to transition from share houses or the family home and benefit from the security of home ownership while not sacrificing proximity to lifestyle and employment opportunities.

"Many of these persons are finding themselves priced out of new projects, leading them to become increasingly active in the established market or choosing to remain on the sidelines, thus contributing to latent demand."

Carter believes there are opportunities for Government to step in.

"Delivering one-bedroom apartments is important to achieve various Federal, State and Local Government housing goals. This includes meeting overall dwelling targets (particularly within inner city locations) and providing a diversity of housing, as well as affordable and key worker housing."

He said more flexible planning policy would allow for more supply, as would the reintroduction of off the plan duty concessions and exemptions for investors and a reduction of foreign buyer levies.

"Property tax reform is an essential step to boost housing supply across Melbourne.

"There has been a marked decline in Melbourne’s apartment launches and subsequent completions since the abolition of investor stamp duty concessions and exemptions for off-the-plan properties (2017) and the increases to foreign investor surcharge (2016 &amp; 2019).

"Recent rises in construction costs and interest rates have only compounded this slowdown. Despite political reservations about investors, it is crucial to acknowledge their role in supporting new housing supply for Victorians. This cohort will drive sales (and rental supply) of new one-bedroom apartments due to the attractive yields and price points."

Charter Keck Cramer is expecting Melbourne’s established unit market will continue to recalibrate upwards over the next 12 months, and the price gap between new and established apartments will narrow.



Opportunities for new one-bedroom apartments in Melbourne?

Brisbane's off the plan apartment market is expected to be "chronically undersupplied for the next two to three years," a new report by property consultancy firm Charter Keck Cramer has suggested.

Charter Keck Cramer's Metro Brisbane&nbsp;State of the Market H2 2023&nbsp;found there were just 1,100 apartments launched in 2023,&nbsp;&nbsp;-76 per cent less than the decade average, while low completions are forecast for the next three years.

They did note that recently launched projects are achieving strong sales results.

"These are priced predominantly at the upper end of the market and targeted towards those who can accept the higher price points required to offset increased build costs," the report noted.

"Other local buyer segments remain priced out of the market or are disincentivised to buy given the uncertainty with interest rates and the significant upfront financial handbrake of stamp duty.

CKC said that whilst new apartment prices are still increasing and are being met with market acceptance in the higher-end and downsizer projects, this has not yet occurred in the mainstream segment of the market.

<h2>Repricing of off-the-plan apartments</h2>

Charter Keck Cramer said their analysis of Brisbane’s housing market shows that the price gap between detached houses and established units is 56% (the pre-pandemic average was 33%).

"Importantly, our detailed analysis of the established unit market (i.e. townhouses and apartments) shows established units are currently undervalued by +5% to +15% and given the supply/demand imbalance will continue to correct upwards over 2024 as the market finds a new equilibrium.

"Furthermore, the percentage of household income required to service a mortgage on a median-priced house has risen to 36% which is +10% to +15% above levels observed prior to COVID.

"When this is considered in light of the deposit hurdle and diminished purchasing capacity of buyers, many will simply need to make trade-offs should they wish to enter the for sale market with greater demand to be driven into the build to sell apartment market."

When the house price hierarchy is once again established, meaning when the established unit market gets closer to the cost of houses, then new off the plan apartments will be able to be delivered at price points which again make apartment development feasible.

"The timing for when this occurs comes down to when rates start to be cut and when government incentives are introduced, however the industry needs to prepare for dramatic price increases in new off the plan apartments of +25% to +30% (compared to prepandemic prices) over the next 12-18 months across many markets."

The median house price in Brisbane at December 2023 was $876,000, whilst the median unit price was $561,000.&nbsp;

<h2>Brisbane supply metrics</h2>

CKC said that while&nbsp;Brisbane’s City Fringe Region has historically been the city’s most active apartment region due to supportive planning controls as well as the proximity to, and views of, the Brisbane River and CBD, as the apartment market continues to mature, the Inner and Middle Regions will demonstrate a growing importance to Brisbane’s apartment supply.

Just 1,100 apartments were launched in 2023, the lowest&nbsp;volume of launches recorded in more than a decade and a -57% reduction on the previous 12 months. The most active region over the past decade has been the City Fringe Region, however Brisbane’s Inner Region has grown in importance over recent years and was the most active region in 2023, accounting for almost 50% of launches.

<img alt="Brisbane CKC" data-entity-type="file" data-entity-uuid="b5e608d4-4e12-422b-8225-643cd4664ed0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202024-03-15%20at%2012.17.04%20pm.png?VersionId=eoD1hM5qous_c6_AtfNq22Nm5W1.UDMa" />

Only 1,600 apartments started construction in 2023 the lowest number of commencements recorded over the past decade and a decrease of -88% from the peak of 13,300 apartment commencements in 2015.

Brisbane recorded 2,200 apartment completions in 2023. This was an uptick of +70% on the 12 months prior but remains significantly below longer-term trends.

CKC said that completions are forecast to increase again over the next 12 months with 3,100 currently under construction and due to be completed in 2024, but due to the low level of launches and commencements recently, apartment completions are forecast to contract once again to just 1,200 in 2025.

"Charter Keck Cramer expects Brisbane’s apartment market to remain chronically undersupplied for at least the next 2-3 years given current market conditions and the time taken to mobilise and build out high-density projects."

<img alt="Brisbane CKC" data-entity-type="file" data-entity-uuid="5deb2774-0030-42c5-ae2a-744442c91287" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202024-03-15%20at%2012.17.38%20pm.png?VersionId=mz.FIFQ4SeM48vXaNu_PN7mCm73mNo.N" />

<h2>Outlook over 2024</h2>

Charter Keck Cramer says conditions in early 2024 will be very similar to those of late 2023, and that it will take a lot more than interest rate cuts to stimulate the build-to-sell and build-to-rent apartments both initially back to life, but also to facilitate them to deliver the unprecedented quantum of apartments required to allow the Federal and State Governments to achieve the aspirational housing targets.

"After considering all the data, our view is that the market will start to turn towards the middle of 2024. Interest rates need to be cut by at least the middle of the year and several incentives need to be introduced immediately to stimulate the BTS and BTR apartment markets.

"These are the swing variables as to how quickly the BTS and BTR apartment markets start to turn and how quickly the housing and rental crisis is addressed."

Charter Keck Cramer expects Brisbane’s apartment market to remain chronically undersupplied for at least the next 2-3 years given current market conditions and the time taken to mobilise and build out high-density projects.

Brisbane market to be"chronically undersupplied: for next two to three years: Charter Keck Cramer

Melbourne's unexplainably soft property market continued into the second half of 2023, but the off the plan apartment market in the Victoria capital market will come good in the short to medium term, Charter Keck Cramer forecast.

It was a little over 12 months ago when the property advisory firm suggested prices could spike in the off the plan space as high as 25 per cent. While the expected price movement hasn't materialized just yet, CKC said it will, and it might even be higher than first thought.

They said there are however a few factors which will contribute to the market going this way.

"Our analysis of <a href="/developments/melbourne-vic">Melbourne’s housing market</a> shows that the price gap between detached houses and established units is 55% (the pre-pandemic average was 35%)," CKC said.

Their analysis found that established units (townhouses and apartments) are currently undervalued by between 15% to 20%, and given the supply v demand imbalance, will continue to correct upwards over 2024 as the market finds a new equilibrium.

"Our analysis suggests that the established unit market (townhouses and apartments) will need to continue to reprice upwards (by around 15% to 20%) until the house price hierarchy is once again established. It is at this point that new off the plan apartments will be able to be delivered at price points which again make apartment development feasible."

They said the timing for when this occurs will come down to when rates start to cut and when Government incentives are introduced, but when they are, they say the market needs to prepare for dramatic price increases in new off the plan apartments of +25% to +30% (compared to pre-pandemic prices) over the next 12-18 months across many sub-markets.

<h2>Government Incentives</h2>

Charter Keck Cramer believe there are several essential tools and levers for Government to both avoid and also pull.

"The key tools and levers to avoid include changing negative gearing, changing CGT, introducing rental caps or rental freezes or further increasing any taxes or charges. This will stifle supply, further suffocate investor confidence, and all but ensure the housing targets fail to be achieved."

On the flip side, CKC said there are key tools and levers that are essential that the&nbsp;Government activate so as to stimulate the build to sell apartment markets.

"These include reintroducing off the plan incentives for local and foreign investors, replacing stamp duty with an annual land tax, enticing empty nesters to downsize by removing stamp duty charges and providing rental subsidies to lower income renters.

"Many of these incentives could be introduced for set periods of time until they have the required stimulatory effect on the BTS and BTR apartment markets. Revenue from the supply that is ultimately delivered can then be collected at the back of these projects."

<h2>Downsizers to be incentivized</h2>

Over 2020-2022 the downsizer segment of the BTS apartment market was the best performing segment of the market. This was because the typical downsizer was less impacted by interest rate rises and many increased their asset base via the large increase in the value of their detached house. As a result, they had the option to downsize into an apartment and also have money to fund their retirement. Over the last 6 months, however, a trend has emerged where the downsizer market has started to lock up and stagnate.

This is because the costs of a new apartment in many sub-markets has increased to the point where the price trade-off that made downsizing financially attractive no longer exists. Charter Keck Cramer notes that the costs of a new apartment, when combined with the upfront stamp duty impost for such a dwelling, means downsizers are being asked to downsize into an apartment via a revenue neutral exchange. The response by many downsizers has unsurprisingly been to remain in place and find other ways to support their children and their lifestyles. What is a concern is that our research shows that many downsizer households are under superannuated and will only downsize if they can age in place but also use part of the house sales proceeds to fund their retirement. Government is strongly encouraged to remove stamp duty for downsizers and also bring in further incentives to encourage them to downsize and retire in a financially responsible manner.

<h2>Melbourne's Supply Metrics</h2>

Melbourne’s Central City Region has historically delivered the greatest number of new apartments, due to a favourable planning scheme, the availability of sites and the proximity to tertiary educational institutions. Charter Keck Cramer however noted that Melbourne’s Inner Region demonstrates its growing importance to metropolitan Melbourne’s apartment supply in an evolving market.

Melbourne is forecast to be Australia’s fastest growing capital city over the next 3-4 years. Melbourne’s population growth is forecast to measure around +1.9% p.a. over FY2024-FY2027, supporting demand for additional and diverse forms of dwellings.

Only 2,600 apartments were launched to the market in 2023, the lowest number of&nbsp;launches recorded over the past decade and measures almost 40 per cent below the previous low experienced during the pandemic.

CKC found that the most active region in 2023 was the Inner Region (39% of launches) followed by the Central City (33% of launches). Activity decreased significantly across all regions compared to the 12 months prior.

In 2023, construction commenced on 3,700 apartments, the lowest number of apartment commencements recorded over the past decade and a significant decrease on peak levels recorded during 2015 (22,500).

<img alt="Melbourne" data-entity-type="file" data-entity-uuid="e387c076-3666-4e8a-8901-0992f3edada4" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202024-03-12%20at%202.02.52%20pm.png?VersionId=biRvMfIDMgN1ExxhkUO9wM3G3012E.2e" />

The apartment completions side of the supply metrics were the scariest numbers to read. CKC said that in 2023 completions were at their lowest numbers since 2010.

"As difficult market conditions have dampened launches and commencements, the impact upon completions (and ultimate supply) has well and truly materialised now that any projects that were a legacy of previous cycles have been completed.

"Melbourne is forecast to deliver sub-5000 apartments per annum on average over the coming three years. There are currently 7,700 under construction and due for completion over 2024-2025."

An additional 6,300 are currently being marketed and due to be complete before the end of 2026, however CKC believe a proportion of these projects are likely to be delayed given elevated construction costs and a challenging pre-sale environment.

"Charter Keck Cramer expects Melbourne's apartment market to remain chronically undersupplied for at least the next 2-3 years given current market conditions and the time taken to mobilse and build out high density projects."

<img alt="Melbourne" data-entity-type="file" data-entity-uuid="8b4ffcc2-a632-4c26-8f3a-648c1f27769f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202024-03-12%20at%202.03.56%20pm.png?VersionId=PDF8HD2YxS1Bvdflf3hH6cKGSew5ziwR" />

<h2>Outlook over 2024</h2>

Charter Keck Cramer concluded by suggesting it will take a lot more than interest rate cuts to stimulate the build to sell apartment market back to life, but also to facilitate them to deliver the unprecedented quantum of apartments required to allow the Federal and State Governments to achieve the aspirational housing targets.

"After considering all the data, our view is that the market will start to turn towards the middle of 2024. Interest rates need to be cut by at least the middle of the year and several incentives need to be introduced immediately to stimulate the BTS apartment markets.

"These are the swing variables as to how quickly the BTS apartment market starts to turn and how quickly the housing and rental crisis is addressed.

"Our research shows that whilst the industry is preoccupied with prices having to increase by +25% to +30% or more for projects to be viable, the biggest risk and one that Government needs to address over the next decade is the shortage of labour required to build out these projects. In this regard, the migration program needs to be changed and tailored to attract key skilled workers into Australia.

"To conclude, the BTS and BTR apartment markets will continue to improve over the course of 2024 and with the market so chronically starved of supply there stands to be a very strong and elastic response as conditions start to improve over 2024 and into 2025."

"After considering all the data, our view is that the market will start to turn towards the middle of 2024," Charter Keck Cramer advised

New apartment projects in Melbourne at lowest levels since 2010, market to turn in mid-2024: Charter Keck Cramer

The recent release of the ABS housing data shows that, on an annualised basis, approvals remain&nbsp;at record lows since the GFC, recording yet again the worst performance in the last decade by a long way.

Only 44,675 new dwellings were approved in NSW in the 12 months to January 2024, a far cry from the 90,000 approvals needed in NSW each year.

There needs to be 7,500 approval each month, and January 2024 saw just 2,875 approvals.

&nbsp;<img alt="ABS Building Approvals Month by Month" data-entity-type="file" data-entity-uuid="31df1aa6-ee0a-40de-b2e4-2c4214289aa6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ABS%20Building%20Approvals%2C%20MbM.jpg?VersionId=BFLnv8ll2s5.hpN1nmqVyC4t_tMBUwzu" />

Total dwelling approvals in NSW fell by nearly 15 per cent in January, the worst decline of any state. Victoria fell by nearly 10 per cent, and South Australia over seven per cent. Queensland record a rise of over 31 per cent in dwelling approvals.

Urban Taskforce CEO Tom Forrest said in the forthcoming Federal Budget, it is critical that Prime Minister Albanese and Treasurer Chalmers assist the states with building the new homes we so desperately need by supporting housing supply with infrastructure funding.&nbsp;

"The importance of infrastructure funding and delivery is becoming increasingly evident as the cause for the slow rate of approvals."

Forrest said it is the Commonwealth&nbsp;which has opened the doors to a massive wave of post-COVID&nbsp;migration and has benefitted from the taxation revenue generated by the influx of skilled migrants.

"It is the Commonwealth that called the State Premiers together and proposed the National Housing Accord," Forrest said.

"The Federal Budget has been boosted by this immigration as well as the strong performance of minerals prices and the mining export sector. It is the Commonwealth that has the fiscal resources to support infrastructure to drive housing supply so it’s time that the Commonwealth helped out the states with significant funding for infrastructure."

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ABS data for January 2024: We must focus on getting approvals up or the housing crisis will continue

Staff Writer

NSW housing approvals remain at record lows

Sydney's off the plan market could see an increased demand in 2024 as Sydneysiders grapple with the cost of living in the most expensive capital in the country, Charter Keck Cramer forecast.

The property advisory giant's <a href="/developments/sydney-nsw">Metro Sydney</a> State of the Market H2 2023 said there is&nbsp;considered enhanced opportunity for apartment projects to receive increased demand in the Harbour capital, given buy to sell apartments&nbsp;represent the most affordable dwelling typology. They note however there needs to be a expectation recalibration due to budget constraints.

CKC believe 2024&nbsp;will continue a growing trend of “sub-market division” where projects within the same precinct are either successful or not based on adequately meeting demand expectations.

"Projects that are design-led, respond to target market requirements and feature a reputable builder will mitigate risk and show greater success," the report read.

CKC believe the “cascade" effect will continue to play out in 2024

"The “cascade” effect can be described as the trade-off/s made by occupiers in terms of the type of housing, number of bedrooms, location, type of tenure and number of people per household," the report read, adding that the trade-offs are primarily driven by buy or rent price points and availability of stock."

<h2>Sydney's new supply issues</h2>

Supply has been an issue across every capital city for a number of years.&nbsp;The NSW Government has committed to the provision of around 375,000 new dwellings between 2024 to 2029 to assist in meeting the National Housing Accord which is 75,000 dwellings per annum.

Last year there were only 8,300 apartments completed in Metro Sydney, around one-third of annual supply requirements. Only 6,300 apartments were launched, -31% below the previous low experienced during the pandemic.

"Launches are anticipated to increase meaningfully when interest rates are cut and there is greater certainty around the suite of new planning controls," CKC noted.

<img alt="CKC" data-entity-type="file" data-entity-uuid="60290cdd-c460-43e1-a00c-8e17894cac45" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202024-03-12%20at%209.56.36%20am.png?VersionId=r4jIZFLKbT9jmPGlUAY06hdc_.qUH1d4" />

In 2023, construction commenced on 7,200 apartments, the lowest number of apartment commencements recorded over the past decade and a decrease of -76 per cent on the peak commencements during 2016.

Sydney's middle and outer regions remain prevalent as new supply locations according to CKC.

"Sydney’s more centralised and middle regions have historically delivered the greatest volume of new apartments. Sydney’s Outer Region however demonstrates its growing importance to metropolitan Sydney’s apartment supply in an evolving market.

"The Middle and Outer Regions of Sydney are playing a key role in housing Sydneysiders and this trend is forecast to continue. The introduction of the Transit Oriented Development State Environmental Planning Policy will also provide a renewed focus on intensified infill development throughout a range of metropolitan locations."

<h2>Sydney off the plan apartment pricing</h2>

The report noted that the&nbsp;Sydney residential property market reflects a 68 per cent differential in median prices between detached houses and units.

"This median price gap is significant by historic standards and expected to funnel demand into the more affordable unit market, particularly as future price increases are anticipated to outstrip income growth," the report noted.

"The percentage of household income required to service a mortgage is close to the highest ever recorded and buyers now need to make tradeoffs should they wish to make a purchase decision."

<img alt="CKC prices" data-entity-type="file" data-entity-uuid="6e88ecee-c219-4483-b45e-f6206a50947c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202024-03-12%20at%2010.01.50%20am.png?VersionId=INT0eGYIf94Rf0rhyNCIMyHfeWxbrU93" />

CKC said price has become a more critical factor for apartments, with the differential between new off the plan and established apartments of greater consideration.

"This differential can often exceed 20% although the benefits of a new apartment have become less attractive than a more affordable established alternative product in the same location.

Recent median price growth in numerous established apartment locations has been driven by greater demand for more affordable secondary product. Until the price gap between “new” and “established” apartments narrows, there is considered less opportunity in the current market to increase off the plan pricing.

<h2>Sydney's 2024 Property Outlook</h2>

CKC believe that with expected rate cuts, or at least rate retention, coupled with the introduction of Federal Government Stage 3 tax cuts, the outlook for the residential property market is expected to be more favourable by mid-2024.

"Median apartment prices have shown incremental growth since the cash rate has (mostly) been on hold since mid-2023 and we anticipate that rate cuts will be a key impetus to stimulate confidence and accelerate price growth."

They said interest rate cuts and increased development capacity through planning policies will collectively not be enough to facilitate delivery of the unprecedented quantum of build to sell and build to rent apartment supply required to achieve the Federal and State Government aspirational housing targets.

"To conclude, the BTS and BTR apartment markets will continue to improve over the course of 2024 and with the market so chronically short of new supply there stands to be a very strong and elastic response as conditions start to improve over 2024 and into 2025."

Demand to come in Sydney's off the plan apartment market: Charter Keck Cramer H2 2023 Report

The Gold Coast off the plan apartment market is expected to have another strong year, anecdotal feedback from local agents paired with data from Australia’s largest dedicated off the plan property website suggests.

Research collected by MatterFact, the new data product from Apartments.com.au who have hundreds of thousands of prospective off the plan apartment buyers visit their platform each month, shows there was consistent enquiry volumes throughout 2022 and 2023 on the <a href="/new-apartments/gold-coast-qld">Gold Coast</a>, despite the much-publicized lack of available stock for buyers to choose from.

Apartments.com.au CEO Mike Bird says, “he was surprised when analysing the numbers given the lack of new projects being launched to the market”.

Apartments.com.au surveyed its user base in Gold Coast, digging deeper into what the barriers are for them to purchase.

The overarching response was a lack of trust in the developer or the builder. Over two-thirds of respondents said they didn’t know if they could trust the two biggest stakeholders in the project.&nbsp;

[smartcode_project:default project_id=113271 project_image_fid=214288]

The next two biggest barriers were also both tied to the builder. 60 per cent of respondents also said a barrier to purchase was the uncertainty of move-in timelines, while half of the respondents said they were concerned with what the build quality would be like come completion.

“These are fairly common concerns statewide when it comes to buying an off-the-plan apartment,” Bird says, however, he adds that the concern is more exacerbated in the Gold Coast than anywhere else in the country.

“There needs to be full confidence now in every stakeholder in the project. The first or second question from the prospective buyer isn’t related at all to the apartment they’re purchasing, it’s related to the developer and the builder.&nbsp;

[smartcode_project:default project_id=113271 project_image_fid=247284]

The latest research was presented the&nbsp;<a href="/project-marketer/colliers">Colliers Residential</a> developers’ lunch on the Gold Coast in late February. &nbsp;David Higgins Director of Residential who hosts the function, says the chronic undersupply on the Gold Coast that has been getting worse for years and with a drop in confidence in builders and developers unable to deliver the much-needed supply only adds to the problem.

"It seems the lack of trust of builder-developer is the number one current issue with off the plan buyers, in fact, it’s almost now secondary to be sold on the apartment configuration or the price, the buyer needs to be sold on the fact the project will be built, and to a high quality.”

“The positive for the market is that Builders and Developers who can demonstrate certainty, and have earned the trust of the buyer, will be supported by strong buyer ongoing demand from both the end user and investors”. Higgins added.

[smartcode_project:default project_id=107928 project_image_fid=234095]

Less than a third of respondents said a barrier to entry was finding value for money in the market, which is incredibly surprising given the Gold Coast’s boom in recent years.

Despite there being very little to choose from in terms of marketed projects on the Gold Coast, only a quarter of respondents said they were struggling to find an apartment that fit their needs.

Bird said that where in other states price and product mix are huge barriers to entry, that doesn’t seem to be the issue in the Gold Coast.

"It’s purely related to developer and builder confidence. If the market can find a way to fix that, and more projects can get out of the ground, then the market could pop again.”

Urban.com.au surveyed its user base in Gold Coast, digging deeper into what the barriers are for them to purchase

What are buyers saying about buying off the plan property on the Gold Coast in 2024?

Sydney apartment developers are feeling confident in 2024.

That's been the headline from conversations in the first six weeks of the year from developers across Sydney. Just as importantly, that's been the feedback from the project marketers too.

Read more: <a href="/news/nsw/how-the-sydney-off-the-plan-apartment-market-is-faring-heading-into-2024">A Project Marketing View:&nbsp;How the Sydney off the plan apartment market is fairing heading into 2024</a>

Joe Nahas, Managing Director at <a href="/developers/coronation-property">Coronation Property</a>, is expecting a strong market this year, however buyers have changed in recent years.

"Buyers are more discerning when it comes to the developer they choose and are not willing to accept anything short of exceptional built quality," Nahas says.

"Buyers today are very different from those five years ago. Buyers are demanding more and wanting to invest in a lifestyle, not just an apartment. They want more space within their homes, seeking residences that are functional and offer an evolving space to grow. They are wanting the resort-style amenities, outdoor spaces and access to shops and dining on their doorstep."

It's placemaking which Coronation are doubling down on currently and in their future pipeline. Having already delivered the successful Paper Mill Precinct in Liverpool, their focus now is on Mason &amp; Main, which will bring Merrylands its largest ever mixed-use precinct, and Ashbury Terraces, a rare proposition in a suburb where apartments and terraces are at a premium.

[smartcode_project:default project_id=31751 project_image_fid=206097]

Coronation has three new projects which are likely to launch this year, the first being <a href="/new-apartments/erskineville-nsw-2043">Erskineville Village</a>.. They also have a <a href="/new-apartments/57-61-archer-street-chatswood">Woods Bagot-designed tower in Chatswood</a> and another project in Ashbury.

"Across all our off the plan projects, we are finding buyers are desiring the best of modern design, quality build, and convenient connectivity," Nahas added.

<a href="/developers/deicorp">Deicorp</a>, one of Sydney's busiest developers year on year, echoed the sentiment. Deicorp's Executive Manager Robert Furolo said&nbsp;the signs are positive that 2024 will be a strong year both for buyer inquiries and conversion to sales in the apartment market.

"Young families, professional couples, and downsizers are all still looking for the lifestyle benefits of convenient and affordable apartment living," Furolo said.

"Together with the ongoing undersupply of new properties in the market, and the return of investors, we are confident of finding buyers for every new home we build and deliver."

Deicorp has just launched their first new project of 2024, <a href="/new-apartments/cosmopolitan-by-deicorp-parramatta-34-hassall-street-parramatta-nsw-2150">Cosmopolitan by Deicorp</a> in <a href="/new-apartments/parramatta-nsw">Parramatta</a>. The two 46-level, side by side towers designed by Turner Studio will home over 600 apartments above retail in the heart of Parramatta on Hassall Street.

[smartcode_project:default project_id=138590 project_image_fid=236113]

Deicorp will also look to launch <a href="/new-apartments/marquet-mary-rhodes-1-9-marquet-street-rhodes-nsw-2138">Marquet &amp; Mary</a>, their $310 million,&nbsp;<a href="/architects/fk-australia" target="">Fender Katsalidis</a>-designed mixed-use tower in&nbsp;<a href="/new-apartments/rhodes-nsw-2138">Rhodes</a>, some 214 apartments across 32 levels, while later this year their Melrose Park masterplan is expected to kick off.

Deicorp is working with PAYCE to create a&nbsp;<a href="/news/nsw/deicorp-and-payces-melrose-town-centre-plans-revealed">new $700 million Melrose Town Centre</a>, which will turn a 55-hectare patch of dirt just&nbsp;outside of Parramatta into a fully mixed-use community.

Turner Architects has drawn up the plans which will see just under 500 apartments delivered across&nbsp;six buildings, as well as commercial, retail, a child care centre, and medical premises in the podiums.

Not to forget Deicorp's current pipeline. They'll be completing&nbsp;construction on&nbsp;<a href="/buildings/downtown-zetland-106-116-epsom-road-zetland">Downtown Zetland</a>&nbsp;and&nbsp;<a href="/new-apartments/the-ashford-castle-hill-25-ashford-avenue-castle-hill">The Ashford</a>&nbsp;in&nbsp;<a href="/new-apartments/castle-hill-nsw-2154">Castle Hill</a>, as well as&nbsp;the first stage of their&nbsp;<a href="/new-apartments/tallawong-village-rouse-hill-shop-30-12-conferta-avenue-tallawong">Tallawong Village&nbsp;</a>project near the Tallawong Metro Station. They will also launch a new release of apartments in the 430-unit&nbsp;<a href="/new-apartments/hills-showground-village-castle-hill-2-mandala-parade-castle-hill">Hills Showground Village</a>&nbsp;development, also in Castle Hill.

[smartcode_project:default project_id=133881 project_image_fid=209816]

Lower North Shore developer <a href="/developers/hyecorp-property-group">Hyecorp</a> saw success over the break at their under construction <a href="/new-apartments/st-leonards-nsw-2065">St Leonards</a> project, <a href="/new-apartments/audrey-st-leonards-13-19-canberra-avenue-st-leonards">Audrey</a>.

Hyecorp Sales Director George Benlian secured the sale of an apartment with the highest price per square metre rate within the building.

“As January unfolded, the off the plan apartment market embarked on its annual dance of unpredictability," Benlian said.

"The month, typically characterised by a lull in activity due to holiday festivities, didn't deter the stream of inquiries. Although many potential buyers were still immersed in their vacation mindset, the real action was set to unfold upon their return to the daily grind."

[smartcode_project:default project_id=110379 project_image_fid=209058]

Benlian said while the majority of purchasers hailed from the local area, some buyers have made the decision to downsize from the Hills District and relocate closer to the city.

"The strategic location of Audrey St.Leonards emerged as a key selling point, positioned opposite the scenic Newlands Park and a mere 400 meters away from a conveniently accessible train station.

"These factors contributed to Audrey's appeal, attracting a diverse range of buyers seeking not only a property but also a lifestyle upgrade."

[smartcode_project:default project_id=110379 project_image_fid=206935]

Benlian believes the economic data which has emerged this year will spur buyers on later in 2024.

"The anticipation of this positive shift in the economic landscape will be encouraging more individuals to make their move in the property market, setting the stage for an optimistic outlook in the coming months."

Hyecorp recently launched <a href="/new-apartments/juliet-roseville-64-pacific-highway-roseville">Juliet</a>, their boutique 35-apartment project in <a href="/new-apartments/roseville-nsw-2069">Roseville</a>.

Read more:&nbsp;<a href="/news/nsw/hyecorp-reveal-latest-north-shore-apartment-development-juliet-roseville">Hyecorp reveal latest North Shore apartment development, Juliet Roseville</a>

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