Apartment supply too tight
It's become clear that rental markets have tightened again over the past 6 to 9 months, and now more expats may be looking to spend more time Down Under than in more volatile parts (I was supposed to be in Dubai and Saudi myself next month, but going to have to let that one through to the 'keeper now).
CBRE's latest apartment outlook report sees city rental vacancy rates collapsing from a historically low 1.8 per cent in 2025 to just 1.1 per cent by 2030.
Source: CBRE
City apartment rents are expected to rise by a further 28 per cent by the end of the decade, led by large increases in Sydney's eastern suburbs, inner west, and lower north shore, as well as inner-city Brisbane.
Historically new apartment values have risen by 3x the rate of increase in construction costs, in turn encouraging new supply, but for the past 4 years construction costs have surged 33 per cent, far ahead of the increase in new units prices.
As such, not a lot of new supply is getting built outside of premium-priced stock certain hotspot areas (e.g. Gold Coast), and CBRE sees median unit values accelerating 28 per cent higher by 2030 to close the gap to spiralling construction costs.
12,700 units per annum are expected to be delivered to the market, miles below the demand for 27,000 per annum.
Source: CBRE
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