How the Sydney off the plan apartment market is faring heading into 2024
Project marketers in Sydney are expecting a strong 2024 in the off-the-plan apartment development space.
2023 was one of mixed fortunes in Sydney, given the harbour capital boasts the highest median unit price of any capital by some margin. Impact from rising interest rates is understandably felt more when the price of the property is higher. Buyers at what had previously been entry-level, around the $600,000 mark in most areas within 10 kilometres of the city, were being told they might only now be able to spend $500,000, given the rapid rise in interest rates.
There was a lot of sitting on the fence, particularly from the downsizer market who often aren't in a great hurry to list their family home. They see downsizing as more of a necessity and tend to take longer in their purchasing decisions given their next buy will be more their 'forever home' than the last.
Despite some barriers to entry and hurdles to overcome in 2023, positive sentiment is creeping back into the market. Project marketers are saying that prospective buyers are starting to get wise that, off the back of inflation data and forecasts of the first RBA rate cut later this year, the market is about to boom again.
While those drivers tend to be more closely tied to the established market, a boom there will see the price difference between off-the-plan projects and established housing grow further, making it even more difficult than it already is to buy property in Sydney.
There's the belief that 2024 is going to be a good year for the off-the-plan market, driven by buoyed consumer confidence and the growing gap between supply and demand.
CBRE Managing Director Dave Milton said across the board they're seeing a lot of new enquiries from prospective buyers that they haven't spoken to previously.
"There's an uptick of people who have just started looking and will be looking to transact at some point in 2024," Milton says, adding that enquiry is coming from every demographic, even the expat market in some of their more luxury projects.
Milton says there's been strong buyer demand at Deicorp's Tallawong Village in Norwest, and Abbie's Lane in Annandale, of which Milton says is assisted by the starvation of stock in the inner-west.
CBRE will be launching Deicorp's new Melrose Park masterplan later this year, a project that Milton says will somewhat help alleviate the current supply crisis Sydney is facing.
Colliers National Director Residential Blake Schulze says buyers have started to enquire, inspect displays, and most importantly transact, since returning from the summer holidays post Australia Day.
"Those that were actively reserving apartments in the lead up to Christmas have now gone through to unconditional sale, while those who were browsing at Christmas are starting to come down to the displays. Then there's a third cohort who are coming in fresh, assisted by the recent economic data suggesting there will be a rate cut later this year."
Schulze says demand has been far-ranging.
"We're seeing demand across a broad selection of projects, which is always a good sign. It's not just certain markets or locations. A whole range of buyer types are now participating in the off-the-plan space."
McGrath Projects Associate Director Adam Sparkes, who is marketing Grand Reve in Castle Hill as well as Yarrabee in Katoomba and DARA in Blacktown, says all projects, which offer a very diverse range of stock, are getting results.
"We had good enquiry over the holidays and that's now resulting in sales," Sparkes says of all of his projects.
All the three-bedroom plus study apartments at Grand Reve have been sold, the final one being picked up late last year, so now the attention has moved to the four-bedroom apartments.
Downsizers are showing the most interest at Grand Reve, which is on track for completion later this year. iCIRT-rated building DASCO, on behalf of developer Kassis Homes, has nearly topped out one of the two buildings. Sparkes says the later stages of construction tend to draw downsizers compared to the early stages.
"They're typically the later apartments to go when the building is approaching completion, as downsizers can see a firm and more accurate end date on the project. They can start to engage agents, work out the best time to sell, and move into the apartment after the sale of their family home," Sparkes says.
"We've had downsizers start to look at the four-bedroom apartments at Grand Reve, after selling out all of the three-bedroom plus study apartments late last year.
Ray White Partner Marcello Bo, who is handling sales at Stargate's Centennial Collection in Bondi Junction, says overall sentiment with buyers is stronger.
"In terms of availability, we're still finding it quite limited," Bo says, adding that it's been the higher price stock which has proven the most popular and has been the easiest to sell.
"With talk of interest rates dropping and the fact they're holding is bringing a lot more confidence. The owner-occupier market is healthy, and that confidence will only increase through 2024."
Ray White has just released a handful of two-bedroom apartments facing the park, as well as the last three-bedroom apartments with city and harbour views.