Demand for apartments remains strong amid growth across population, employment and income

In more than 160 suburbs across Sydney, Melbourne and Brisbane, renters outnumber owner occupiers with tenants making up more than half of the residents, new CBRE data shows.

CBRE’s Apartment Vacancy and Rent Outlook report notes monthly rents are still 30% to 40% cheaper than alternate buy options at current prices and forecasts demand for housing in the next decade is expected to benefit from the triple boost of rising population (+4.1 million), increasing jobs (+2.8 million) and rising income (+$39,000).

Suburbs where renters are the biggest cohort of residents include Parramatta, Waterloo, North Sydney, Collingwood, Parkville, Fitzroy, Spring Hill, Newstead, and St Lucia. Suburbs where the renter pool sits just below 50% include Randwick, Punchbowl, Epping, Box Hill, Sunshine, Kensington (Melbourne), Highgate Hill, Milton, and Cannon Hill.

Several of these suburbs sit along new transport corridors like Sydney’s Metro, Melbourne’s Suburban Rail Loop, and Brisbane’s Cross River Rail and CBRE sees potential for the renting population in these areas to increase as infrastructure, density, and investor interest converge.

The report shows median rents are forecast to grow by 24% between 2025-2030 across 53 precincts in Australian capital cities. In addition, 92% of two-bedroom apartments are forecast to have rents exceeding $700 per week and 33% exceeding $1000 per week by 2030.

CBRE’s Pacific Head of Research Sameer Chopra notes apartment values have not kept pace with construction costs over the past five years with the disparity sitting at 20% which makes the existing stock of apartments an attractive market for investors

“Our long-term forecasts assume that owner occupiers will comprise 60% of new supply purchase. CBRE expects apartment values to accelerate from 2025 as consumers adapt to higher income, low supply and scope for falling interest rates,” Mr Chopra said.

“Of the investor market, we see a growing share moving across to institutional build-to-rent (BTR) sector and over the next five years institutional BTR comprise approximately 10% of new apartment supply, equating to about 6,000 apartments per year,” Mr Chopra added.

In terms of supply, approximately 60,000 apartments are expected to be delivered each year from 2025 to 2030, while Australia’s forecast population growth requires an apartment supply of approximately 75,000 per year to avoid further falls in vacancy.

CBRE expect capital city vacancy will fall further to 1.1% by 20230 from 1.8% in 2025. These tight conditions will endure as vacancy remains at around half of the previous decade average of 2.5%.

• In Sydney, apartment delivery is expected to average 11,700 per year across 2025 to 2030, well below the estimated demand of 30,000 for total housing stock. The vacancy rate is set to fall from 2.0% to 1.2%.

   

• In Melbourne, apartment delivery is set to average 9,000 per year while demand for housing stock is likely to average 38,000 per year over the next five years, driving vacancy down from 2.1% to 1.4%.

   

• In Brisbane, apartment delivery is expected to average 4,600 per year from 2025 to 2030 while housing stock is likely to average 16,000 per year with citywide vacancy is expected to fall from 1.1% to 0.7%.