City Beat October 2023: All markets transacting in the Sydney off the plan apartment market
Sydney unit values are approaching new highs after CoreLogic's national Home Value Index showed another month of growth for apartments and townhouses in the harbour capital.
Values rose 0.6 per cent over October, taking Sydney's 2023 unit growth to eight per cent.
Despite the median unit value ($832,000) being over $200,000 more than the next most expensive capital city unit median (Melbourne, $615,000), Sydney units have proven to be one of the best performing unit markets in the country over the year, third only to Perth (+9 per cent) and Brisbane (+9.8 per cent).
CoreLogic's overall index has been tracking upwards since finding a trough in January when the market bottomed out after losses over 2022 when the RBA started its rate tightening cycle.
The trend in advertised stock levels remains a critical feature of the market influencing housing trends, CoreLogic Research Director Tim Lawless says.
"After 10 months of below-average vendor activity, the flow of new capital city listings has ramped up through winter and spring to be almost 12 per cent higher than a year ago," Lawless says.
"Although total listings (ie new listings plus relistings) remain lower than this time last year and below the previous five-year average, it is clear that inventory levels are rising."
Sydney's advertised stock levels are 9.3 per cent up through spring.
What's happening in Sydney's off the plan apartment market?
Supply has too been one of the leading contributors to the success in the off the plan apartment market for the majority of 2023.
While in October there were some significant development applications submitted which will assist in the supply moving forward, the number of new apartment projects coming to market has been critically low.
Agents across Sydney are reporting that each segment of the market is moving.
Colliers National Director Blake Schulze says there's appetite for luxury apartments, middle tier stock, and the more price pointed units.
Schulze says it's still a strong owner-occupier market, but investor activity has started to pick up. Not so much by way of increase enquiry however, more so a higher conversion from investor enquiry to sale than there has been in a while. The investor purchasing hasn't necessarily been on the most price pointed stock either.
"Investors have a more owner-occupier mindset now," Schulze says.
"They're looking forward to owning it as a short-term investment, but something they will reside in in the future."
Most of the buyers Schulze and the Colliers team are working with are off the plan buyers for the first time.
"A number of buyers have been priced out of the housing market, and are now looking at apartments as a viable option, and that's all phases of life, whether it be young professionals, young families, or even established families.
"Traditionally the lifecycle of homeownership is that you'd move into an apartment when you're young, move out and buy a house, then maybe downsize and move back into an apartment in later life. Now however, if the apartment is set up right, particularly in a masterplanned, placemaking way with well curated amenity and lifestyle, then the middle phase of that cycle is conducive."
David Highland's Highland Property sold nearly $200 million worth of apartments off the plan in October across their portfolio, holding 2,300 buyer inspections, which he says is an important metric to track.
"It shows buyers are out there, and if not yet transacting, they're starting their journey to do so," Highland said.
Highland recently relaunched Nautique in Rushcutters Bay, the large scale apartment building in the harbourside suburb in 13 years.
Nautique
He said the launch gave them a good gauge of what's selling.
"The launch showed there's demand from every segment, with sales from the low $1 million's to $15 million, and everything in between."
Highland says the top end of the market is "incredibly strong."
"Anything over $10 million is selling quickly. There’s not enough stock for this market and we’re getting significant enquiry for this type of product from downsizers. The middle market and investment level are too buoyant given the lack of supply across the majority of Sydney."
Nautique
That's been the case over in nearby Elizabeth Bay where Toohey Millers' debut project has seen three out of the five full-floor apartments sales snapped up just a few weeks into the launch. Sales ranged between $8.25 million and $13 million.
CBRE Residential / Stewart Residential's Ben Stewart has been marketing No.1 Onslow Avenue, saying the project has resonated with a number of different buyers.
"While nearly all of the enquiry has come from downsizers, it's not necessarily all been localized," Stewart says, noting that wile Elizabeth Bay, Potts Point and the nearby harbourside suburbs domianted enquiry, there's been interest from the Lower North Shore too.
Stewart puts the success down to the limited supply in an area like Elizabeth Bay. He's also grabbed a couple of sales at Eurangi, the new MH Design Union block of just eight apartment on Bondi Beach's dress circle Campbell Parade.
"Much like Elizabeth Bay, there's only even going to be a limited amount of supply in these premium suburbs, particularly on the streets either on the beach or the harbour."
Stewart is about to launch Muse Potts Point, the joint venture between Toohey Miller and Third.i just off Victoria Street.
The 13 apartments, designed by WMK Architecture and Mathieson Architects, capture significant harbour views from the higher apartments in the Brougham Street building.
"The great thing about Potts Point is it appeals to such a diverse market," Stewart says.
"There's nothing like Potts Point anywhere else in Sydney. It's got cosmopolitan amenity with a food and restaurant lifestyle, by the way, and the convenience of being to walk into work while looking at the harbour."