Charter Keck Cramer identifies potential for developers amidst decrease in Sydney, Melbourne, and Brisbane apartment supply

Charter Keck Cramer has recently released an update on the apartment markets in three of Australia’s major cities: Sydney, Melbourne, and Brisbane.

The report tracks the amount of apartments released by developers in each of the three cities from Q1 2012 to Q1 2022. The figures shown on these charts illustrate developer sentiment for those respective cities. Through this, we can see that the current supply of apartments across each city is lower than usual.

The current projection shows that Melbourne and Sydney have had a substantially lower number of apartment projects launched in comparison to their respective ten-year average figures, with an average of 3,300 apartments for Melbourne and 4,800 for Sydney.

Brisbane’s latest release of apartments, however, is only slightly below its ten-year average of 1,700 apartments. The Queensland capital is also reported to have had a higher number of project launches in Q4 2021 than it did in pre-pandemic Q4 2019. This may be due to the demand brought about during the pandemic, as Australians migrate to the sunny state in search of the Queensland lifestyle.

The data ultimately shows that the apartment market across all three states is undersupplied in comparison to demand. With the post-COVID climate bringing with it rising interest rates and an increase in inflation, construction costs, and rental rates, this undersupply will likely persist and even increase.

According to Charter Keck Cramer, this presents potential opportunities for developers and investors who understand their target audience and go on to develop and invest in the right areas.

Charter Keck Cramer identifies owner occupier downsizers/rightsizers, investors, and first home buyers as the primary demographics that developers should target. Given the current climate in the real estate market, these groups are seeking to buy apartments at a higher rate than others.

As demand for apartment residences in Sydney, Melbourne, and Brisbane continues amidst decreased supply, the prospects could be promising for developers who are active in these markets.

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