A hefty 23,000 apartments have changed hands across the country’s 50 most popular apartment locations as more Australians embraced high-rise living last year.
The apartment boom sweeping through Sydney and Melbourne -- and moving into Brisbane -- is reflected in the rush of new development and healthy turnover of existing apartments.
The Top 50 apartment report compiled exclusively for The Australian by researcher RP Data shows Melbourne’s CBD -- where nearly 1300 units sold in the year to May -- as the country’s sales hotspot. The second-highest number of apartments changed hands in Queensland’s Surfers Paradise followed by the nearby Gold Coast suburb of Southport.
“The big surprise is Sydney’s Parramatta,” says RP Data research director Tim Lawless. Just under 700 apartments sold in Parramatta, a third more than in Sydney’s CBD -- making it the biggest-selling suburb for apartments in NSW,” according to the research which ranks suburbs by the number of sales.
Western Australia is yet to catch the apartment bug with its first appearance at No 25 on the Top 50 list with more than 400 Perth CBD apartments changing hands.
Sydney’s beachside Manly took the prize for strongest value growth, up nearly 26 per cent for the year.
Perth’s beach suburb of Scarborough took second place for price growth with a rise of nearly 19 per cent. Other Sydney beaches also fared well with Dee Why up 15.3 per cent and Cronulla’s median values rising 13 per cent. Dee Why also ranked as the second-most popular NSW apartment spot with 666 sales in the year to May.
Values on the Gold Coast were still under pressure with Surfers Paradise down 1.4 per cent on 1200 sales, Broadbeach off 13.1 per cent and Southport bouncing back 9 per cent in value.
Billionaire apartment developer Harry Triguboff’s confidence is high with his Meriton Group recently spending an aggressive $190 million buying a site in Sydney’s inner-southern suburb of Rosebery -- the highest price paid for a site in the company’s 50-year history.
While offshore demand is one reason the market will remain buoyant, Triguboff argues the changing nature of households also plays a significant role.
More people are sharing apartments, Triguboff says. “Where it was two people per apartment, now sometimes it’s four.” And if apartments can be made more affordable it may well drop to two again, spurring more demand, Triguboff says.
The strong price growth across the housing market has allowed those who had been planning to downsize for some time to achieve good prices for their homes and buy an apartment or smaller property, Rose Group managing director Bryan Rose says. While they may be moving out of a large home, Rose, whose family company is developing a total of 2000 units in Sydney’s harbourside Breakfast Point, says there has been a trend for space with more sales for three-bedroom apartments in the past six months.
Rose expects the overall demand for apartments to remain strong over the next year and expects continued price growth for good Sydney apartments.
RP Data’s Lawless notes that Melbourne CBD apartments are “startlingly cheap” with median sale prices in the 12 months of just $415,000. In Sydney’s CBD, the median unit sales price was $649,000.
“(Melbourne CBD’s) overall value is pulled down by a number of very small apartments,” says Lawless, who notes that apartment sizes can be 50 square metres or less.
Another stark difference between Sydney and Melbourne is the nature of the hot spots. In Melbourne, the turnover is concentrated in the CBD. In Sydney, Lawless says, the middle ring and outer-middle suburbs figure strongly. Parramatta, Dee Why, Rhodes and Cronulla chalked up more sales than the Sydney CBD. And Wollongong, 82km south of Sydney, achieved more unit sales than in Sydney’s core.
However, this will change with new apartment projects planned in Sydney’s city centre, both in terms of new buildings, and office towers converted to apartment living.
While values were still sluggish on the Gold Coast, the number of sales is high showing a bounce back in demand, Lawless says.
Both Triguboff and long-time Brisbane developer David Devine expect to see growth in Brisbane’s unit prices.
Devine, whose Metro Property Development is building or marketing 1465 apartments with another 1000 planned, says Brisbane’s apartment prices are one-third below those in Sydney and that gap will narrow.
“I have never been so bullish about property as I am today,” Devine says.
Meanwhile, Triguboff also sees sustained low interest rates as contributing to the demand for housing and expects to see one more cut to rates before this cycle is done.
Lawless says rental returns also held up with the average yield across Melbourne 4.2 per cent and Sydney 4.5 per cent. “As capital gains taper, eventually it will be helpful to have solid yields.”
This article was originally published in The Australian.
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