Report | Intelligent Investment

Australian Apartment outlook

October 25, 2023 5 Minute Read

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Key Points:


  • Rent outlook:  CBRE now expect median rents to grow by $120/week (+26%) between 2023-2028, across 53 precincts in Australian capital cities. A number of precincts are likely to see mid/high 30% rental growth.
  • Vacancy: We expect capital city vacancy will fall further to 0.8% by 2028, from 1.8% in 2023. These tight conditions will endure as vacancy stays at around 1/3rd  of the previous decade average of 2.5%.
  • Demand to rent:  Over the next 10 years, demand is expected to benefit from the triple boost of rising population (+3.9m), rising jobs (+2.6m) and rising income (+$36k). Monthly apartment rents are 30% cheaper than alternate buy options at current prices.
  • Supply:  CBRE forecast the future supply of apartments to range from a high of 80,000 (expected in 2026) to as low as ~60,000 in 2024 and 2027. Australia’s forecast population growth requires apartment supply of ~75,000 pa to avoid further falls in vacancy. 
    • Sydney:  Apartment delivery to average 14,000 pa over 2024-28, well below 33,000 pa demand for housing stock. Vacancy rate is set to fall from 2.2% to 0.8% and avg. rent growth of 6% pa to 2028.
    • Melbourne:  Apartment delivery to average 10,000 pa over 2024-28, nearly 40% 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 1.7% to 0.9%.
    • Brisbane:  Apartment delivery to average 6,500 pa over 2024-28. Demand for housing stock (apartments and communities) is likely to average 16,500 pa which will drive down city-wide vacancy from 1.1% to 0.8%.
  • Construction and capital value: Historically, capital values have grown at 3x construction cost growth. But in the past 3 years, construction costs (+37%) have out-stripped value growth. In our view, capital value for residential projects will accelerate significantly higher to ensure a healthy ecosystem for developers.