- Apartment performance is outpacing houses in some aspects.
- Stock remains very low, even in Australia's most densley populated city.
- Apartments have historically had higher yields and solid demand.
The Australian apartment market has been sharply in focus due to its resilience, affordability, and the important role it plays in housing supply.
Apartments have also garnered attention as performance begins to outpace standalone houses, with Hotspotting director, Terry Ryder, pointing out apartments recorded faster rental growth, superior price growth rates over most of the past 12 months, and a growing share of new dwelling approvals.
“There is a plethora of reasons why apartments are increasingly becoming the property of first choice for home buyers and investors,” Ryder said.
“It is not just about affordability – although that plays a big role in our largest cities – but our population is simply embracing apartment living more because of the opportunity to reside in more desirable locations as well as having easy access to lifestyle precincts.”
Ryder also observed that a growing number of developers are creating more owner-occupier stock, including three and four bedroom apartments, alongside superior resident facilities such as rooftop and BBQ areas, infinity pools and spas, private dining rooms, and more.
Apartment stock is relatively low
Hotspotting general manager, Tim Graham, noted that apartments comprised only 46% of dwellings in Australia’s most densely populated city, Sydney.
“In London, apartments comprise 94% of dwellings, while in Singapore it is 93% and in Hong Kong, it is 84%,” Graham said.
Furthermore, apartment stock in smaller capitals like Hobart is a mere 15% of homes.
Investors attracted to apartments
Investors have long been drawn to apartments due to their historically higher yields and solid demand from tenants, according to Ryder.
“Now, we are seeing rental growth in apartments outpace houses, as well as superior price growth over the past year.”
“We have significant numbers of downsizers active in the market, as well as hundreds of thousands of overseas migrants arriving on our shores, with many of them coming from cities where apartment living is the norm.
“All of these factors point towards a solid future for apartments that are designed and built to be long-term homes of first choice for tenants and owner-occupiers alike,” concluded Ryder.
Top 10 apartment hotspots in Australia
- Annerley, Brisbane
- Belconnen, Canberra
- Clayton, Melbourne
- Dicky Beach, Sunshine Coast
- Gymea, Sydney
- Kensington, Melbourne
- Mitchell Park, Adelaide
- Southport, Gold Coast,
- Stanmore, Sydney
- Yorkeys Knob
Annerley, Brisbane
The suburb is well placed to benefit from the upcoming 2032 Brisbane Olympics, said Graham, with the suburbs closest to main venues typically recording the highest growth in values.
“The Brisbane suburb of Annerley is well-placed to feel the positive impacts of the 2032 Olympics, as a near neighbour of the main event venue – Woolloongabba – and other key venues in and around the Brisbane CBD,” said Graham.
“Beyond the Olympics’ influence, Annerley is a well-located and well-connected suburb in Brisbane’s inner-south.”
Units will likely be the abode of choice, particularly with the median house price for the suburb above $1 million, observed Graham, who also noted units flew off the market in 13 days (on average) compared to 23 days for houses.
Belconnen, Canberra
Despite a seven per cent uplift, Ryder observed in median unit prices in Belconnen remained an affordable $490,000. This is also substantially lower than the Canberran median house price of $950,000.
“The suburb of Belconnen, on the shore of Lake Ginninderra in the District of Belconnen, is one precinct where most residents live in units – in the past 12 months there were 295 unit sales and 23 house sales,” said Ryder.
“The location of the sprawling University of Canberra campus alongside Belconnen generates steady demand,” he added.
Belconnen is also in close proximity to a range of important hubs, including Canberra International Sports and Aquatic Centre, Calvary Hospital, Canberra Institute of Technology, the Australian Institute of Sport and the Australian Federal Police regional headquarters.
Clayton, Melbourne
The suburb benefits from good proximity to Monash University and Monash Medical Centre, said Graham.
Among other boons for the locale are the expansion of the Clayton Health and Education precinct, the Suburban Rail Loop, and more.
“Enhancing the LGA further is a construction boom with dozens of projects under construction or in the pipeline across the city,” said Graham.
Dicky Beach, Sunshine Coast
This idyllic spot along the Sunshine Coast has been the apple of many eyes, but Ryder said it may be tough to get your hands on a home in the locale.
“Dicky Beach is a small enclave with tightly held real estate,” he said.
“There are only a handful of sales each year and listings typically sell within a fortnight.
“Vacancies are low, and rents have risen steadily in the past three years – while the long-term annual capital growth rate is around 13%.”
Gymea, Sydney
This Sutherland Shire location is a ‘family-oriented’ area, according to Graham, and has a relaxed community feel.
“Lifestyle is a big part of the attraction, with proximity to numerous bays and beaches in Port Hacking and the Georges River, as well as the Royal National Park,” he added.
“Gymea is a ‘nerve centre’ suburb, with major medical and education amenities, a Westfield, and rail links to central Sydney.
“The price gap between houses and apartments is boosting demand for attached dwellings – in the suburb of Gymea, the median price for units is roughly half that of houses.”
Kensington, Melbourne
The median unit price for the suburb is $550,000 and units typically spend 35 days on the market.
The inner city suburb recorded a 10-year growth average of 2% per year, and vacancy rates are 0.7%.
Graham said Kensington is known for its village feel, cafes, and diversity of architecture, including Victorian terraces, cottages, warehouse apartments and new structures in the west of the suburb.
Mitchell Park, Adelaide
This suburb benefits from a range of educational and medical hubs, including Bedford Park and Tonsley campuses of Flinders University, TAFESA, Tonsley Innovation precinct, and the Flinders Medical precinct.
Southport, Gold Coast
Median unit prices for the suburb are $505,000, with properties spending 22 days on the market.
The suburb likewise benefits from being at the centre of activity, particularly as a legacy of the 2018 Commonwealth Games.
“The Games was the catalyst for the light rail network and the $1.8 billion Gold Coast University Hospital,” said Graham.
“The latter forms part of the Gold Coast Health and Knowledge Precinct, predicted to have 26,000 jobs when completed.”
Stanmore, Sydney
The suburb is one of Sydney’s best-connected suburbs, according to Ryder, with several Sydney locals The Property Tribune reached out to agreeing to its accessibility.
“It is known for its long strip of shops along Parramatta Road,” Ryder said.
“It benefits from its proximity to the University of Sydney campus in neighbouring Camperdown, which also has the Royal Prince Alfred Hospital.”
Weekly asking rents for 2048, including Stanmore
Yorkeys Knob, Cairns
Median unit prices for the suburb are $305,000, with properties typically spending 14 days on market. Median rental yield is 6.6%, and the vacancy rate is 0.8%.
