The Sydney apartment market is expected to hit the ground, in 2023, running. High levels of enquiry and population outpacing supply are some of the factors boding well for the year to come, according to Savills‘ Sydney New Apartment Sales – Q3 2022.
While enquiry levels are no longer at their late-2021 peak, Savills said current enquiry levels remain 50% to 150% higher than pre-Covid, supporting the sentiment that the sector is simply on hold until certainty is provided on affordability and value moving forward.
The report also observed a levelling of pricing over the quarter, “… [showing] a resilience in underlying value as we see an increase in rental yields and a lack of projects advertised in the affordable market, limiting supply,” said the report.
Quoting data from REA Group, the Savills report said that the $2 million to $4 million plus price bracket has seen the highest enquiry per listing by price.
The $3 million to $4 million bracket appeared to be the most undersupplied and had 13.2 enquiries per listing. The next highest was 11.9 enquiries per listing in the $4 million plus market.
The report also said there was a clear correlation between high-quality products and the higher square metre rates achieved.
Source: Savills Research, CoreLogic, as presented in Savills’ Sydney New Apartment Sales – Q3 2022.
One example of undersupply highlighted in the report included Eastern Suburbs’ oversized luxury apartments. The report said it recently achieved record values, nearing double comparably located sales rates in a declining market.
A couple of factors are expected to keep Sydney’s apartment chugging along and give it a stronger-than-expected start to 2023.
The remainder of this year is expected to be seen out by a moderate volume of FIRB assessed buyers with foreign debt. The report said they will likely continue to see value in Sydney apartments for the rest of 2022.
Savills’ report said upward pressure on sub-$1.5 million apartment prices can be expected in mid-January next year due to the pending first home buyer stimulus.
The heightened enquiry volumes also suggest strong local demand, which Savills said, “… will compound to provide a stronger start to 2023 than would be expected off the back of the current year.”
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