Sydney market apartment update & outlook

Join Charter Keck Cramer's Research & Strategy experts as they unpack the H2-2022 figures from our National Built to Sell (BTS) and Build to Rent (BTR) Apartment Database as well as the ABS 2021 Census. Blended with insights from what they see on the ground with Charter Keck Cramer's developer, financier and builder clients, they will deep dive into Sydney's Apartment Market.

The Sydney housing and rental markets have been tremendously distorted by the pandemic. As expected, both the “For Sale” and “For Rental” markets are recalibrating.

The Build to Sell (BTS) apartment market is anticipated to continue to struggle for the first half of 2023 and until there is more certainty with interest rates. Construction costs and higher debt finance costs are making projects unfeasible, whilst uncertainty over rising interest rates and inflation, weak consumer sentiment and the absence of investors is making presales very hard to achieve. The Build to Rent (BTR) apartment market is still emerging. It continues to be very challenging to get projects to stack up as well as to secure funding for construction.

Critically, the latest 2022 Population Statement prepared by the Australian Government now forecasts Net Overseas Migration to return to pre-COVID levels in Australia over this financial year (FY23). Charter Keck Cramer’s view is that this is still a conservative estimate based on what is being analysed across various statistics.

There continues to be a growing mismatch between several supply and demand-side metrics which is likely to result in a substantial shortage of supply over the next few years. Leaving aside how difficult it is to obtain development approval for a project, it is currently taking a typical BTS apartment project of 75-100 apartments approximately 8 months from project launch to construction commencement and a further 22 months from construction commencement to completion (conservatively 3 years). In addition, it is likely to take a BTR project of the same scale around 22 months to build out.

Given the current distortions in the market, many investment and development decisions made today must also be made with an eye to where the market will be in 2 to 4 years’ time. Now is the time to make these key decisions and they need to be based on forward-looking evidence and data.

Key issues to be explored will include:

• The structural change in living preferences (increased demand in apartment living and renting) using ABS 2021 figures,

• The phases of supply - apartment launches, construction commencements and completions,

• Outlook and forecasts for prices and rents,

• The opportunities and risks for the BTS and BTR sectors in the short, medium and long term.

We look forward to having you join.