According to a recent report by Urbis, the Australian apartment market was distinctively impacted in the second quarter of 2020 as a result of COVID-19.
Mark Dawson, Director at Urbis, said clearance of available inventory dropped from 15 per cent in the first quarter to 10 per cent of available stock selling in the second quarter.
“The slowing speed of sales was very much expected given uncertainty in the economy and limited movement of people nationally,” he said.
Mr Dawson said more volatility and variation in the data is to be expected as different states emerge, submerge, and re-emerge in different pathways out of COVID-19 related restrictions.
“Demand remains restricted and when this happens, the market typically balances itself by diminishing supply, which supports prices.”
He said that with fewer projects launching and taking longer to sell, this flows through to total housing supply approved and delivered in years to come.
“We need to be careful this does not drop to levels detrimental to Australia’s recovery from the pandemic. Current jobs and future liveability and affordability are on the line, so we do need to find ways to sustain the pipeline. This could be targeted stimulus, like Home Builder, but for off the plan infill development or supporting Build to Rent to plug the gap in housing supply at risk.”
Mr Dawson said the development sales and marketing industry is very well equipped to reach buyers remotely. He noted that the off the plan industry has successfully presented virtual 3-D apartment displays and fly-throughs of future developments and precincts for a number of years.
“As the economy opens up and movement of people resumes there will be continued demand for a range of housing densities throughout our cities. The drivers of demand for apartments that were there before the pandemic: affordability, views, high levels of walkability, multiple transport options and convenient local living will be just as relevant.”
“We expect design and management of apartments will continue to evolve with customer preferences. This could mean more flexible spaces within apartments, but also within buildings to promote healthy and practical lifestyles ready to deal with a changing environment,” he concluded.
Some key findings from the report include:
- COVID-19 impacts on the Apartment Market were clear in Q2 2020. Clearance of available inventory dropped from 15 per cent in Q1 to 10 per cent of available stock selling in Q2.
- Only 23 new projects launched nationally in Quarter 2 2020 – compared to 60 projects a year ago in Quarter 2 2019.
- Impact on off the plan sales can be seen with the clearance of available stock dropping to 10 per cent as a national average.
- Prior to COVID-19, the apartment market was showing signs of momentum on the back of wider housing market growth. The first signs of impact from COVID-19 are visible in the second quarter, although demand levels have remained at similar levels seen this time last year in Q2 2019 data.
- Rapid drops in rent were seen in March (6 per cent) and April (3 per cent) as inner-city markets were hit by a halt to in-migration and a spike in listings (average listing volume is 14 per cent up on this time last year).