Despite the pandemic-induced preference shift toward larger homes, more Australians than ever are taking up apartment living.
The 2021 Census of Population and Housing found that more than 10% of all people in Australia spent census night in an apartment.
Apartment living continues to grow
Though the 2021 Census clearly shows most people in Australia live in separate houses, the cohort that do live in an apartment is on the rise.
Australia’s housing profile is evolving. Over the past 30 years, the number of occupied apartments across the country has more than doubled – up 108% – to 1,418,898 dwellings at the 2021 Census.
High rise on the rise
But it’s not just occupied apartments on the rise, it’s high-density living too.
Four or more storey blocks are on the up as Australia’s population grows. The share of apartments in blocks of four storeys or more has almost tripled since 1991.
So where are these apartments?
Close to half of all occupied apartments are in Australia’s largest state, New South Wales. Home to more than eight million people as at the 2021 Census, it is also the most densely populated. That’s hardly a surprise. Victoria and Queensland come in second and third.
Within the states, it is unsurprisingly the capital cities where most apartments are being built.
What’s next?
Throughout the pandemic lifestyle has become a greater priority, with proximity to the CBD less so.
At the same time, the experience of lockdowns and tough restrictions made apartment living relatively less attractive for many.
Buyers are also paying a greater premium for houses. Since February 2020, the average premium paid for a house in Australia’s capital cities was 43%, but in Sydney and Canberra that was closer to 60%.
According to PropTrack’s Home Price Index, national house values have appreciated 38% in the time since the pandemic began to June 2022, while unit values have risen just 16% in the same period.
However, a return of migration, a rebound in the international student market, increasing borrowing costs, and reduced borrowing capacity are combining to buoy demand in the apartment market.
Already, PropTrack data shows unit rental demand is back in a big way as affordability constraints kick in and migration resumes, particularly in Sydney, Melbourne, and Brisbane.
That’s good news for investors – rents are surging and with home prices stalling yields are set to rise.
But homebuyers are also likely to be turning to more affordable options as mortgage rates rise.
For first-home buyers, the cheaper price point of units is a factor, and if the proposed Help to Buy scheme is implemented, there will be a lot more choices in the apartment market. The same is also true for the extended Home Guarantee scheme.
Apartment living is back in vogue and has the potential to become more so. Even though we are looking at a downturn in housing prices, units may hold up better.