Apartment Vacancy and Rent Outlook Report 1H 2025

CBRE’s Australian apartment report presents our forecasts across 53 precincts.  
 
Key points:

• CBRE expect median rents to grow by 23% between 2024-2029, across 53 precincts in Australian capital cities. By 2029, 90% of precincts are forecast to have rents for 2-bed apartments exceeding $600/week (55% exceeding $750/week). 
• We expect capital city vacancy will fall further to 1.1% by 2029 from 1.9% in 2024. These tight conditions will endure as vacancy stays at around half of the previous decade average of 2.5%.
• In our view, capital value for residential projects will accelerate significantly higher to ensure a healthy ecosystem for developers.
• Our analysis indicates newly built apartments trade at a premium to older vintages. For example, newly built two bedroom apartments are at 30% price premium to older vintages. 
• High construction costs and better amenities have also put upward pressure on rents for new builds. These higher rents assist in meeting the return hurdles for newly built apartments.  
• Over the next 10 years, demand for housing is expected to benefit from the triple boost of rising population (+4.1m), rising jobs (+2.8m) and rising income (+$39k). We see c$960bn of additional income in the system to support mortgage, rents and other living expenses.
• Monthly rents are 37% cheaper than alternate buy options at current prices. After accounting for on-costs such as municipal rates and strata fees, it is cheaper to rent in all precincts across Australia. 
• CBRE forecast the future supply of apartments is likely to hover around 60,000 pa over 2025-29. Australia’s forecast population growth requires apartment supply of ~75,000 pa to avoid further falls in vacancy.
• Sydney: Apartment delivery to average 12,200 pa over 2025-29, well below 30,000 pa demand for total housing stock. Vacancy rate is set to fall from 2.2% to 1.2%. 
• Melbourne: Apartment delivery to average 9,300 pa over 2025-29, nearly 25% below Sydney. Demand for housing stock (apartments and communities) is likely to average 38,000 pa over the next 5 years. This should continue to drive down city-wide vacancy from 1.8% to 1.3%. 
• Brisbane: Apartment delivery to average 4,800 pa over 2025-29. Demand for housing stock (apartments and communities) is likely to average 16,000 pa which will drive down city-wide vacancy from 1.5% to 0.9%.