Recent CBRE forecasts state that the supply and demand discrepancies for inner-city apartments will support ongoing growth in CBD rentals.
It is estimated that 570,000 apartments are needed over the next three years across the nation’s capital cities — excluding Darwin.
This number is significantly greater than the current national supply of 55,000 apartments per annum.
CBRE’s data monitors 53 residential districts across Australia.
In June alone, two-thirds of the recorded precincts displayed over 10 per cent year-on-year rent growth and one-third showed over 20 per cent growth in CBD rentals.
The overall data recorded that inner city suburb rents grow at double the pace of outer ring suburbs.
CBRE Pacific Head of Research Sameer Chopra said the company forecasts this mismatch between supply and demand is a major driver for rental growth.
“Our data also highlights that some precincts will see significantly larger population growth than others, with vacancy issues to be most acute in the major city centres and associated near city suburbs such as Waterloo and Pyrmont in Sydney, Carlton and Southbank in Melbourne, Fortitude Valley and New Farm in Brisbane, Subiaco in Perth and Campbell in Canberra.
“In most precincts around Australia we’re expecting 0.2 per cent to 0.5 per cent apartment vacancy contraction in the next 12 months. This comes at a time when 80 per cent of precincts have a sub 1.5 per cent vacancy and will be a key driver of future rental growth,” said Chopra.
He also noted that rents in some precincts could inflate by as much as 30 per cent on a cumulative basis over the next three years as vacancy drops below 0.5 per cent.
CBRE predicted that there will be an additional demand for 49,000 new apartments in near-city suburbs and 43,000 more in Brisbane, Melbourne, and Sydney’s inner city markets between 2023 to 2026.