Surge in demand for new homes as construction cost pressures ease
Construction activity is strongest in the multi-residential sector in Victoria
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Demand for new homes is surging after a lacklustre year – and one property type is proving particularly popular among would-be buyers.
The latest New Homes Report from research firm PropTrack shows a 16 per cent increase year-on-year in search enquiries for new developments on realestate.com.au in July.
Boutique luxury apartments are especially in-demand, data shows. Enquiries for unit projects in inner Melbourne are the highest in the country.
The Victorian capital accounts for 34 per cent of all current residential construction projects in the country, with most underway in the inner-city.
Enquiries are the second highest on the Gold Coast, home to nine per cent of all current apartment developments.
Adelaide’s central and Hills regions have the most enquiries per development, but the number of projects underway in the city are particularly low, meaning more would-be buyers for fewer listings.
Analysis of demand shows premium unit complexes with rooftop swimming pools, wine rooms and gums are popular.
In July, Elysian Residences in Sherwood in Brisbane’s inner-south saw the most enquiries, followed closely by Murcia in Wollongabba in the inner-city.
The Walmer project in Melbourne’s Abbotsford came in third for the most enquiries sent by property seekers on realestate.com.au.
The New Homes Report also reveals the pace of building cost increases has slowed over the past year, with prices stabilising as supply chain issues improve.
Input prices rose by 0.6 per cent in the June quarter, which is the lowest increase in 18 months, Australian Bureau of Statistics data shows.
The cost of certain essential building materials, like concrete and plumbing products, has risen. However, the extent of those increases has been offset considerably by a slump in steel prices.
It marks good news for the construction sector, which has struggled through a tough period of time.
PropTrack senior data analyst Karen Dellow said the development of new dwellings slowed significantly over the past few years.
“The pandemic caused supply chain issues, increasing the price of essential building materials, which increased building costs, while labour shortages have also been a growing problem,” Ms Dellow said.
Frequent construction site shutdowns during Covid-19 stalled work and slowed down new home completions, she added.
“As a result, the higher cost of new properties led to decreased demand, compared to its peak in September 2021, when the government’s HomeBuilder Grant drove many property seekers to build houses to take advantage of the government subsidy.
“The combination of labour shortages and increasing prices has led to a backlog of work impacting the approval and commencement of future developments.”
However, ABS data shows easing construction costs might be helping to get work out of planning phases and into production.
There was a 14 per cent increase in new commencements in the March quarter, the latest figures reveal, totalling 46,546 dwellings. That has been driven by a whopping 57 per cent increase in apartment and townhouse commencements.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Villa prices saw particularly strong growth, with capital values increasing by 33.4 percent year-on-year
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Dubai’s real estate market showed strong performance in the second quarter of 2024, with notable increases across the residential, office, and retail sectors, according to a new ValuStrat real estate report for Q2 2024.
Villa prices experienced particularly strong growth, with capital values rising by 33.4 percent year-on-year.
Haider Tuaima, Director and Head of Real Estate Research at ValuStrat said: “The Dubai real estate market has shown impressive growth and resilience in recent months. The ValuStrat Price Index for Residential Capital Values increased by 6.4 percent quarterly and 28.2 percent annually, reaching 178.2 points.
“Despite severe flooding caused by record rainfalls in April, the quick and effective response from developers and authorities helped to control the damage, ensuring that market activity and property valuations remained robust in the subsequent months.”
The office sector also performed well, with the VPI for office capital values surging by 31.7 percent annually and 9.4 percent quarterly, reaching 212.5 points—the highest quarterly increase in a decade.
In the retail sector, Emaar Properties reported 98 percent occupancy in their prime mall assets, while overall mall occupancy stood at 96 percent during the first quarter of 2024. The hospitality sector also saw growth, with total international guests reaching 8.12 million as of May 2024, a 9.9 percent increase compared to the same period last year. Hotel occupancy reached 81 percent, rising by 1.4 percent year-on-year.
Despite these positive indicators, Tuaima added, “The decline in transaction volumes calls for a closer examination of market dynamics as stakeholders navigate this evolving landscape.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
