Affordable apartments driving Sydney and Melbourne markets, Brisbane and Gold Coast geared toward the premium: Urbis Apartment Essentials Q2 2024

There's a large divergence in apartment sectors across three of Australia's largest capital city markets, data from Urbis has showed.

The Urbis Apartment Essentials Report Q2 2024 surveyed 162 projects around the country, from presales to newly built. They recorded 1,112 sales in the second quarter.

A total of 754 active projects were monitored for their status and progress in the market.

Looking at sales as a percentage of available stock for projects in presales and under construction, the Q2 2024 inventory clearance was as follows: 

• Gold Coast – 20% 
• Inner Brisbane - 13% 
• Perth – 17% 
• Melbourne – 16% 
• Sydney – 13% 

Paul Riga, Director of Economics at Urbis, noted that inventory volume remains low, but apartments are moving at a more consistent pace.

“Every surveyed city saw the number of sales increase this quarter, with sales as a percentage of available stock above 2022 and 2023 levels in Melbourne, Sydney and Perth," Riga said.

"Brisbane and Gold Coast are down from their highs, with these markets seeing a reduced level of stock available for sale.” 

Sales as Percentage of Available Stock – Presales and Under Construction 

Source: Urbis Apartment Essentials Q2 2024 

Melbourne received a much-needed boost to its supply pipeline with 3,600 apartments approved in the quarter, heavily influenced however by a 900-unit build-to-rent approval.

The 299 sales recorded in Perth was the highest level in two years, while completions in 2024 are expected to be the highest number since 2017.

Owner-occupiers accounted for 48 per cent of the steady sales in the Gold Coast, while Brisbane's weighted average sale price reached over $2 million for the first time as luxury apartments dominated sales.

At the other end of the spectrum, Sydney's weighted average sale price dropped below $1 million for the first time since 2020, namely due to an increase in more affordable apartments hitting the market.

Supply delays 

A slow down in apartment supply hitting the new apartment market is evident, with launches low compared to a few years ago, and notably the time for a project to be built heavily constrained by the development environment. Factors include the impact of COVID, construction costs, as well as labour and supply shortages. 

“Looking at all the monitored projects in our Urbis Apartment Essentials database, in June 2024, the average time for an apartment building to go from development application to built is currently 75  months," Riga noted.

"Five years ago, it took only 45 months. It is taking an extra 2.5 years on average to deliver completed developments, no wonder we are seeing constrained supply.

2024 Set for Settlements 

Despite a general slowdown in apartment development observed, in Q2 2024 the apartment pipeline showed positive momentum compared to long-term quarterly averages.

Notably, there was a 20 per cent increase in projects starting presales and a 26 per cent rise in approved apartments for developments.

Over 20,000 apartments under construction are scheduled for completion in 2024.

Future Supply by Apartment Status 

Source: Urbis Apartment Essentials Q2 2024

Affordability and Product Type 

Urbis' review of new apartment pricing around the country revealed an increase in more affordable apartments selling, with the exception of Queensland. This was largely due to two reasons, more luxury product for sale in the Sunshine State and a greater proportion of one-bedroom apartments selling in Melbourne, Sydney and Perth.

“We are seeing a tale of two markets,” said Riga.

“In Sydney and Melbourne, the top-selling projects are more affordable. In Queensland, the Brisbane and Gold Coast markets are still targeting the luxury/premium market.” 

Density Drivers 

Adaptable reuse and Transport Orientated Development (TOD) strategies will continue to be tools in the toolbox for driving density.

“Councils have the opportunity to be creative here,” Riga said.

“For example, in North Sydney commercial buildings are being adapted into affordable apartments.” 

Transport Orientated Development and Urban Renewal strategies will continue to feature across our cities, with examples including: 

• Sydney –The recently completed North West Metro line and the future West Metro line, connecting Paramatta to Sydney CBD, are scheduled for completion in 2032.  
• Melbourne –Opportunities for renewal in the Melbourne CBD, locations including Arden and  Fishermans Bend. 
• Brisbane – Density around the Cross River Rail and Brisbane Metro lines which are both under construction. 
• Gold Coast – The Gold Coast tram line continues to grow, with Stage 4 to extend out to the airport. 
• Perth – The Subi East rejuvenation is anticipated to bring over 4,000 new residents to the area.

“We are definitely seeing new infrastructure driving apartment delivery in our cities,” said Mr Riga. “Good density is what we as city shapers want to see happen, apartments being built which promote a  sustainable, inclusive and easy lifestyle.” 

Who’s Buying? 

In Q2 2024, the off the plan apartment market continued to attract demand from owner occupiers as foreign investor demand remained subdued.

Around the nation, owner-occupiers dominated surveyed sales, however at a slower rate in Perth and on the Gold Coast, where owner-occupiers recorded 48 per cent of sales. However, in Perth, the high proportion of investors was driven by interest in one specific project, rather than being a reflection of the market. In Sydney, Melbourne and Inner Brisbane the owner-occupier rate ranged from 70 per cent to 80 per cent.  

Price per square metre rates continued to pick up the pace, however, the Perth and Sydney markets saw more affordable apartments selling.

Price per Square Metre Trend – Presales and Under Construction 

Source: Urbis Apartment Essentials Q2 2024

Riga said the Sydney projects surveyed in the quarter tended towards the more affordable end of the market.

“We saw a greater amount of projects selling in  Western Sydney suburbs. With more infrastructure being built in Sydney, the opportunity is there to  deliver affordable apartments with greater connectivity.”