April 2023 - National Snapshot New Property Demand Profile
Market Commentary from Urban Partners for April 2023
“We’ve found a lot of buyer enquiry in March and April has been targeted in Sydney’s west, which proves a more affordable option compared to projects closer to the city. Sydney is facing the same challenges as Melbourne in the rental squeeze, as first home buyers try and gather enough of a deposit to buy. Some developers are offering incentives surrounding lower deposits which is a huge entry barrier in Sydney where the median unit price is $787,000 and rising. Developers are waiting for market sentiment to improve a touch more before launching projects, but those who are in the market now are taking advantage of the lack of available projects. Low supply can be just as favourable as high demand.”
Mike Bird ??? - Urban.com.au Chief Executive Officer
“There’s some strong data out there which is improving market sentiment. With the RBA now starting its holding phase, and the huge immigration forecasts, there’s set to be a lot more demand in the market. People are thinking now is the time to buy. They aren’t wanting to wait another 12 months. While enquiry hasn’t necessarily increased, the quality of the enquiry is now much higher, and we’re getting considerably more inspections from that enquiry. Last week we had around 30 deposits across Sydney, so people are still transacting. We sold out The Cambrian in Paddington by Robby Ingham on the launch day, all 15 apartments. Now we’ve got the equally rare Woollahra Collection by Fortis which will appeal to the Sydney high-end market.
Dave Milton - CBRE Residential Projects – Australia Managing Director
"There's a few different segments of buyers in the current marketplace, the most intriguing are the ones lingering for the last 12 to 18 months, re-emerging and ready to buy. That's more prevalent at the higher end of the market. They may be waiting longer for firmer confidence around construction. The other buyer profile is first home buyers re-engaging weeks after enquiring. They've been having to double check that they can still lend the amount they were approved for given the recent frequency of the RBA rate hikes. Urgency continues to not be at the level we'd like it to be - there's a big difference between enquiring and acting”"
Eddie Mansour - Ray White Projects Managing Director
“We’re now moving into a stabilisation phase for both property values and interest rates. There’s maybe one more rate increase, but the recent move by both CBA and NAB cutting their fixed rates gives us an even clearer picture as to what’s about to happen whatever the RBA say. Stabilization is a huge thing in property. It removes the fear of the unknown and the fear of change. That will bring more buyers back into the market in the near term, and after a period of holding, barring external circumstances globally, the RBA will cut interest rates as inflation starts to noticeably come down. Rates coming down always results in prices going up. Buyers have more money in their pockets as borrowing capacity pops up. That will in turn see more stock come to the market as developers realise there are more buyers transacting.
Mark Bernberg - Ray White Projects WS Managing Director
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"Despite mixed market sentiment, the residential market across Sydney’s off the plan market has continued to yield strong results. The Colliers Project Marketing team recorded a 104 per cent increase in sales in Q1 compared to the same time last year. We have found that there is strong market participation from local owner occupiers who are opting to purchase in projects close to where they are currently living or working. We are experiencing strong market demand for premium oversized apartments across Sydney, dominated by local owner occupiers and downsizers.
Blake Schulze - Colliers National Director of Residential
“With the Reserve Bank pausing interest rate increases last month, and then the Commonwealth Bank of Australia dropping their fixed home loan rates, it is hopefully becoming clear that the period of interest rate rises the last year have come to an end. This, coupled with an incessant undersupply of new apartments and some positive media, has given potential buyers some clarity about the property market moving forward. Buyers who have been sitting on their hands, afraid of further rate increases, are jumping back into the market back into the market with gusto both the off the plan and completed developments segments.“
“We are seeing a strong return of the property investor. Investors such as sophisticated institutional purchasers and private investors buying through a SMSF through to first time investors are all seeing now is an excellent time to buy into a high quality development for a medium to long term hold. The consumer is now more researched than they ever have been – we treat all new enquiry (owner occupiers or investors), coming to our team as a ‘white hot lead’.?
As a general theme all are seeking high quality construction and a strong track record from the team behind a given development – both seen as crucial elements when considering buying a brand new or off-the-plan dwelling.”
Adam Sparkes - McGrath Projects Associate Director
"Anecdotally, it seems the aggressive interest rate hikes from the RBA has dampened the market in Sydney more than any other city, which isn’t a surprise given the higher affordability issues in the Harbour capital. While prices have come down, what buyers can now lend compared to 12 months ago has come down much further, so buyers are having to reassess with their new lending number.?
Finally investors are showing some signs of returning, which is usually a sign that the market is at the bottom. High rental demand and soaring rental yields look like they will continue for years to come, so investors are seizing on the opportunity with vacancy rates so tight across the whole of Sydney."
Joel Robinson - Urban.com.au Editor in Chief
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