Apartments Are Back

Inner-city apartment markets are growing in appeal

Land and property in regional centres of Australia have become both expensive and scarce. With small blocks of land costing more than the average Australian can afford, inner-city apartment markets are back and growing in appeal.

Houses in regional areas with easy access to capital cities continue to be in strong demand although finding an affordable deal is challenging to say the least. Up until recently, buying property in regional areas was somewhat affordable, as was purchasing in metropolitan suburban areas like Pakenham or Clyde. Although today the market has changed.

With new developments being scarce, demand being high, and construction costs across the board increasing by about 30%, finding a piece of land, let alone an affordable property, is becoming increasingly difficult.

Additionally, it’s unlikely you would find a block bigger than about 300m2, which would still cost around the $600,000 to $700,000 mark. For those who have managed to find land, it’s likely to will take 1 to 2 years to title due to high demand and very limited supply.

With all of this in mind, what we’re seeing is that a large two-bedroom apartment in an inner-city area like Ivanhoe (VIC), Essendon (VIC), Coolum (QLD), or Indooripilly (QLD) is in many cases a better buy than what regional centres currently have on offer.

Market TrendsAccording to Corelogic, property values in Melbourne rose 16.3% over the year to November and Brisbane’s house prices increased by a staggering 27.9% during the same period.

A typical Melbourne home is now about $187,000 more expensive than it was at the beginning of January, while units have experienced a gain of $49,000. As of November, Brisbane’s median house price was sitting at $757,000.

While inner-city apartment vacancies have been high, in part due to the loss of the international student market, this is forecast to begin changing. More than 200,000 international students can now return to Australia (as of December) without an exemption after our borders have been closed to them since March last year.

In regards to population changes, there were 18,907 people who moved to Victoria from January to March of this year, but 23,771 residents left the state. NSW experienced the next biggest fall in interstate migration, with 30,684 departures compared to 26,221 arrivals. Since the start of the pandemic, 22,651 people have left Melbourne for other parts of Victoria. In total, Melbourne has lost 34,366 residents, including 3682 who have made the move to Brisbane.

Brisbane’s population grew by 1.9% during 2019-20, recording the highest growth rate of all capital cities, according to the Australian Bureau of Statistics. Queensland experienced a net gain of 28,500 people from interstate in the March quarter and 21,465 departures. Queensland’s population is expected to surge by more than a quarter of a million people in the next four years according to forecasts in the federal budget, as people flood in from other states.

While there has been a lot of movement over the past couple of years, the forecast for Australia’s population is looking positive and is projected to reach 29.1 million by the end of June in 2032. Natural increase is forecast to drive all of Australia's population growth in 2022, with overseas migration forecast to return to being the largest contributor to population growth again from 2023-24.

A dramatic increase in population growth (especially with boarders opening) coupled with heavily reduced volume of new development completions is set to create the perfect recipe for a thriving apartment market.

The complete contemporary all-in-one lifestyle

Many new apartment developments such as Anthem Essendon by Blue Earth Group boast the complete contemporary lifestyle. With amenities such as fully equipped gyms, cinemas, golf simulators, children’s facilities, wellness centres, squash courts, community gardens, and co-working spaces, it’s resort-style living right on your doorstep.

Developments like these offer an all-in-one lifestyle - it’s next-level living that you just can’t get in housing estates. You might live in a 2 bedroom apartment that is 80m2, although downstairs you have all of the facilities you need to live a rich daily life.

Convenient inner-city living is the future. This is where we believe the world is going to be heading.

While new apartments are still expensive, if you are an investor wanting to get into the market, apartments are where you want to be looking at this point.
We believe that apartments are going to have a huge resurgence over the next 5 to 10 years, and that resurgence is beginning now.

With population growth, low supply of new products, and a trend towards convenient living, we believe apartments are on their way to being back in high demand.

If you would like to learn more about current investment opportunities available in apartment markets of Melbourne and South-East Queensland, get in touch with us today.

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