More conviction in apartment value growth across Australia

27 May 2024

Perth, metropolitan Brisbane and Adelaide are tipped to record Australia’s strongest apartment value growth according to a new CBRE survey.

CBRE’s Residential Valuer Insights Q2 2024 survey received responses from 170 of CBRE’s residential valuers across the country – gaining a comprehensive understanding of current activity and future expectations.

Nationally, valuers expect apartment values to increase over the next 12 months, with 52% expecting price growth and 21% expecting values to increase by more than 5%.

In relation to house values, 70% of valuers expect home value growth over the next 12 months and an increasing proportion are expecting at least 5% growth. The highest conviction is for Perth, Adelaide and metropolitan Sydney.

As in the previous quarter, houses and recently renovated properties are the most in demand residential real estate in Australia, as softer conditions prevail for unrenovated properties and development sites.

54% of the respondents – reported strong to very strong purchaser demand in their local markets over the past three months, an uptick from 49% in Q1 2024.

Demand was particularly strong in Perth, Adelaide and the Gold and Sunshine Coast markets, which continue to benefit from affordability and lifestyle drivers. In contrast, softer demand is evident in Tasmania, outer metropolitan Melbourne, and the ACT.

Kat Hale, CBRE’s Residential Valuations National Director said a significantly larger percentage of valuers expect demand to increase in the next twelve months than decrease and that there is scope for an increase in supply.

“Recently renovated properties are well received in the market, with buyers still showing some hesitancy around construction costs and potential delays for development approvals associated with unrenovated properties and vacant land. The sentiment differs depending on location, as there is strong demand for vacant land in Perth, where overall demand in the property market is strong,” Ms. Hale said.

“We may see an increase in market activity as we enter H2 2024 if we have more certainty around interest rates as this will give homeowners and purchasers alike more confidence in making decisions around buying and selling.”

CBRE’s Pacific Head of Research, Sameer Chopra said the survey highlighted a high level of demand from first home buyers and local investors.

“First home buyers remained the most active buyer type in metropolitan Melbourne, Adelaide and the ACT in the last three months. Local investors surpassed upgraders to become the second most active buyer type this quarter, while developers and inter-state migrants were the least active,” Mr. Chopra said.

“For both first home buyers and investors, the rapid and ongoing growth in rents pulls forward the ‘buy now’ decision. Tight vacancy will also make a lot of re-location and interstate migration more challenging.

“Interstate investors were still most active in Perth and outer Brisbane this quarter while local investors were most active in metropolitan Brisbane and Perth, upgraders were most active in metropolitan and outer metropolitan Sydney and Tasmania.”