Where and Who: Future of Apartment Sector

As the housing market in Australia continues its recovery from the pandemic downturn, Foxwood Property’s managing director, Clint Willoughby shares his thoughts about the apartment sector and the trends of today—and the future.

The housing market is booming—what are we seeing in the apartment space?

We haven’t seen the same levels of demand and growth in the apartment market; investors have re-entered the market this last quarter and we are starting to see owner occupiers who have been outpriced in the housing market consider apartment and townhouse options.

The growing gap between the housing and apartment market will increase the rates of sale across a handful of markets in the next six to 12 months, including some regional lifestyle locations that are going through monumental sales and rental boom alike.

What can we expect to see in the apartment market during the next couple of years?

Seachange and treechange will remain popular as people adapt to a new style of work-life balance post-Covid-19 and buyers continue to be outpriced in metro.

Key apartment markets in coastal and rural locations with limited supply, such as the NSW Central Coast, Byron Bay, the Gold Coast, Mornington Peninsula and Newcastle will continue to be popular.

Tasmania is another great example of a lifestyle location experiencing exponential growth.

We have a handful of clients who have given us a brief to specifically seek out sites in key lifestyle locations—usually with great infrastructure and amenity around them such as express rail services, large hospital, plenty of retail and only one to two hours from a metro CBD.

The high-rise markets in Sydney, Melbourne and Brisbane will continue to be sluggish, and will see improved rates of sales once overseas migration resumes.

Our key off-shore channel partner based in Hong Kong has advised that buyers are keen to be able to re-enter and invest in the Australian property market, but few like to purchase site unseen.

Our key off-shore channel partner based in Hong Kong has advised that buyers are keen to be able to re-enter and invest in the Australian property market. We expect to see a real increase in buyer actively from this segment once overseas travel resumes.

Are there any key locations nationally you would expect to see growth in apartments?

The new norm of working from home a day or two a week and changes in lifestyle choices have been the main drivers towards the increase in demand for regional markets and the smaller capital cities.

Locations such as the NSW Central Coast, now an extension of the Sydney metro area thanks to the opening of the Northconnex road tunnel, is now a viable alternative to Sydney’s west and north-west, while the Gold Coast and Sunshine Coast markets are experiencing unprecedented numbers of buyers from NSW and Victoria purchasing as owner-occupiers, investors or discretionary investors.

Are investors really back? What are we seeing at sales display suites?

We a seeing about 20 per cent investors visiting our displays, mostly in the sub-$800,000 market.

Regional markets and outer fringe areas of metro cities will lead the resurgence in investors as they are experiencing a dramatic drop in vacancies and increase in rents.

Greater Western Sydney is a great example of where we are seeing investors returning to the market. With strong rental yields, lower price points and record low interest rates, it’s a great time to invest strategically in certain locations.

We expect investors to return to our capital cities in 2023-2024 when international migration returns and our population growth matches pre-pandemic levels.

We expect the next wave of overseas investors to come from Hong Kong. The recent political unrest there, coupled with the Australian government’s offer of work rights with a pathway to citizenship for Hong Kong residents has spiked interest in Australian property.

Traditionally, HK Chinese buyers are lured to Melbourne and Sydney markets with large existing Chinese communities offering strong educational opportunities for families.

What’s your next project launch?

We are about to launch a highly anticipated waterfront residential and retail precinct for property group St Hilliers.

The Waterfront, stage one of the Central Coast Quarter precinct, is on the NSW Central Coast and comprises of 136 one – two- and three-bedroom apartments.

With huge growth and demand in the region, coupled with easy connectivity to Sydney, we anticipate many of our buyers will come from Sydney, seeking an affordable coastal lifestyle or sound investment opportunity.

This will be the first waterfront precinct on the Central Coast and offers arguably the best waterfront value of any new project release in 2021.

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