Australia’s Housing Market in Transition

Australia is seeing a significant decline in approvals for attached homes, such as apartments, townhouses, and semi-detached homes. These types of housing are essential for creating more sustainable urban development, using existing infrastructure like public transport, schools, and healthcare services. However, new figures reveal a nearly 18% drop in approvals for these homes in August, compared to July. Even over a 12-month period, approvals are down 14%, with just 58,249 new homes approved nationwide.

This trend reflects a broader issue across the country. In Sydney’s Elizabeth Bay, for instance, developer Fortis is facing pushback from locals and the City of Sydney for plans to demolish two buildings with 28 rental units to make way for 22 luxury apartments for sale. Similarly, in Melbourne’s St Kilda Road, Sunnyland Investment Development Group is developing the $403 million Park Quarter project, where 85% of the 204 high-end apartments have already sold. These developments highlight the demand from downsizers for premium apartments, but there’s a growing concern about the lack of affordable, investor-focused housing.

Mark Harrison, managing director of Wingate, which is financing the Park Quarter project, noted that several factors are holding back more affordable housing projects. These include the absence of stamp duty incentives for off-the-plan purchases, higher surcharges for foreign buyers, and a significant rise in construction costs. To make these investor-grade apartments viable, prices would need to increase by 20% from 2020 levels, but that price surge hasn’t materialized, making these projects less feasible.

There are signs that the housing market is beginning to shift. According to Wingate’s Mark Harrison, offshore sales channels are starting to engage buyers from Malaysia, Indonesia, Singapore, and China. However, activity remains slow. While there is some growth in sales for investor-focused apartments, developers are no longer creating entire projects targeted at investors or overseas buyers, as they did in previous years.

Paul Riga, a director at national planning consultancy Urbis, noted that developers now offer a mix of units. Some of the smaller units, often sold at a loss, serve as a way to attract buyers to the larger, more profitable units. This mixed approach reflects the changing market dynamics.

Back on the Gold Coast, Andrews Projects is pushing forward with their newly downsized development. Sarah Andrews, sales manager, said the company aims to get approval by early next year, with construction starting in the second quarter of 2025. Despite the challenges, she emphasized that all segments of the housing market are undersupplied, particularly on the Gold Coast, and that the situation is likely to worsen without more development.

As the property market continues to evolve, buyers and renters need access to flexible financial solutions tailored to their needs. Uptain offers a range of loan products designed to help borrowers navigate these challenging conditions. Whether you’re seeking the right financial product, or in need of tailored financing options, Uptain can help you achieve your goals.