Unveiling The Upswing

SYDNEY RESIDENTIAL MARKET INSIGHTS

We recently attended The Urban Developer’s Sydney Residential Developer Summit, where some of the property industry’s leading voices provided insights on the state of the market and how progressive apartment developers are adapting to the challenges.

With a wealth of informative and thought-provoking content presented on the day, we have zoned in our top five takeaways that we’ll be watching over the next 12 months:

MARKET CYCLES & RECENT TRENDS

The Sydney residential market has experienced an extraordinary cycle due to the global pandemic and ensuing policy responses. Witnessing an unprecedented 25% increase in property values within two years, followed by a 14% decline in values as a result of the fastest rate-hiking cycle on record. However, there are now signs of recovery, with sales volumes normalising and property values showing an upwards trend, increasing by 3% from the trough. The market is now transitioning to a new phase, influenced by low supply levels, increasing enquiries and sales activity, along with a perceived end of the rate-hiking cycle drawing buyers back in.

The high-end market in Sydney is leading the current upswing, with the last quarter showing up to 5% capital growth in areas including Ku-Ring-Gai, Manly, Baulkham Hills and the eastern suburbs. Typically, this high-end of the market serves as the leading indicator for capital growth trends across the city, further indicating that we are moving into the next phase of the market cycle.

Provided that we are at – or close to – the peak of the rate hiking cycle, we’re going to continue to see an upward trend in values off the back of higher consumer sentiment and relatively low levels of supply. CoreLogic forecasts that we’ll continue to see a subtle upswing for 2023, so long as there are no unexpected spikes in inflationary pressures.

SUPPLY DYNAMICS

Although there is a pipeline of properties under construction, particularly in the high-rise unit sector, approvals for new developments have been declining which will lead to a potential deficit of new stock in the future.

As Australia welcomes back approximately 350,000 international migrants this year, this constrained supply will contribute to upwards pressure on property values, particularly within the largest migration markets – the south-eastern suburbs and Parramatta. This presents an opportunity for developers to position their projects in these blue-chip areas of Sydney, locations which are historically popular with overseas migrants and that have shown strong levels of growth as the city’s population has swelled.

PRE-SALES & BUYER ENGAGEMENT

The pre-sales market has evolved significantly and become increasingly complex, nurturing strong relationships with potential buyers and taking them on a personalised journey has never been more important. The off-the-plan sales process now requires more transparency, tailored communications and extensive information sharing to build a deeper level of trust. As a result, savvy developers are now employing various strategies, including increased touchpoints and ongoing development updates to engage with clients through the sales process – creating and sustaining a connection with prospects from enquiry all the way through to settlement.

LOCALISED DESIGN

To create successful residential projects, knowing and understanding the local market is crucial: who they are, where they are coming from and what they want. It is important for developers to conduct market research to comprehend the preferences and needs of potential buyers. While amenities enhance the desirability of developments, for owner-occupied properties, developers must strike a balance between providing impressive amenities and keeping OC fees manageable for buyers. Ultimately, for owner occupiers, the main priority is coming home to a spacious living room and master bedroom where there is space to live.

The investment property market is also evolving, and developers need to adapt their design to meet potential structural changes, with renters needing to downsize post-COVID as we see record low vacancy rates.

AI IN PROPERTY

Finally, AI is revolutionising residential design and site optimisation by expediting processes, providing accurate insights, enhancing decision-making capabilities, streamlining workflows, mitigating risk and minimising cost overflows. 

In assessing development applications, the Victorian and New South Wales Planning Departments are utilising AI to expedite the planning process by allowing developers to assess building designs against specific planning codes. The system visualises the design in 3D, displaying compliant and non-compliant areas, while providing specific explanations for non-compliance to simply resolve the design.

This platform can be used for various planning codes and geometries, significantly improving the process by reducing approval times by up to 90% when compared to the traditional approval process. This is only just the beginning when it comes to AI’s impact on the property industry, and we look forward to seeing how the technology evolves as its effectiveness and quality improves.

INFORMING STRATEGY

At Neue Media, we understand the power of adapting to the ever-changing landscape of the residential development market, and we are leveraging these valuable insights to craft communications and media strategies that resonate with our clients’ target audiences. By tailoring our approach to appeal to shifting buyer needs and expectations, we are delivering integrated communications eco-systems that engage with audiences across multiple touchpoints. Our focus is on nurturing leads throughout the purchaser journey; creating and delivering tailored day-to-day content that informs, educates, and engages at each individual stage. With our commitment to staying ahead of the curve, we ensure that our clients achieve maximum impact and drive successful outcomes through a considered approach that commences from the first trigger to start looking, right up until a buyer moves in.

Get in touch if you’d like to discuss how we could effectively connect with your target audiences.  

Thank you to The Urban Developer team for putting on an incredibly insightful event, especially Adam Di Marco and Taryn Paris and for hosting such refreshing panel discussions.