Apartment market conditions remain divergent across the country. Nevertheless, new supply remains moderate in all markets irrelevant of broader demand conditions. This means supply is not keeping pace with underlying demand and levels of under-supply continue to grow.
Broader housing market conditions and prices have continued to slow under the weight of higher interest rates and other cost of living pressures. Melbourne, Sydney and Canberra have been more impacted by these pressures and by affordability. In contrast the smaller capitals have stayed strong and continued to see price growth, albeit also moderating over recent months.
This lull in housing market conditions is likely to continue over the first half of 2025. However, with inflation falling back into the RBA’s target range it appears interest rate cuts are likely to commence soon. This will boost household confidence, and the growing national housing under-supply could see conditions turn relatively quickly in the second half of the year.
For new apartments, demand remains solid from owner occupiers and particularly downsizers across the country that have enjoyed strong equity growth in their existing properties. Investor demand has been more muted but is rising, encouraged by both strong rental growth and existing price growth. Off-the-plan stamp duty incentives should also help boost the subdued Melbourne market.
