Apartment Vacancy and Rent Outlook Report 2H 2024

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

Key points:

• CBRE expect median rents to grow by $170/week (+25%) 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 1.2% 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.  
• Over the next 10 years, demand for housing is expected to benefit from the triple boost of rising population (+3.9m), rising jobs (+2.6m) and rising income (+$36k). We see c$940bn of additional income in the system to support mortgage, rents and other living expenses.
• Monthly rents are 26% cheaper than alternate buy options at current prices. But the relative economics favours “buy” in most CBD markets and across most precincts in Canberra and Perth. 
• CBRE forecast the future supply of apartments is likely to hover around 50,000 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 12,100 pa over 2025-29, well below 30,000 pa demand for housing stock. Vacancy rate is set to fall from 2.2% to 1.5%.
• Melbourne:  Apartment delivery to average 8,700 pa over 2025-29, nearly 35% below Sydney. Demand for housing stock (apartments and communities) is likely to average 37,000 pa over the next 5 years. This should continue to drive down city-wide vacancy from 1.8% to 1.4%.
• Brisbane:  Apartment delivery to average 4,200 pa over 2025-29. Demand for housing stock (apartments and communities) is likely to average 18,000 pa which will drive down city-wide vacancy from 1.5% to 0.9%.