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By Leanne Jopson

Apartment vacancy and rent outlook for 2024 and beyond

What's ahead for apartment vacancy and rent?

Well, new data from CBRE research found that median rents are expected to grow by $120/week (+26%) between 2023-2028, across 53 precincts in Australian capital cities.

In fact, a number of precincts are likely to see mid/high 30% rental growth.

It is also expected that capital city vacancy will fall further to 0.8% by 2028, from 1.8% in 2023.

These tight conditions will endure as vacancy stays at around one-third of the previous decade's average of 2.5%

Renting Property

Demand to rent

According to the CBRE's research, over the next 10 years, demand for housing is expected to benefit from:

  • the triple boost of the rising population (+3.9m)
  • rising jobs (+2.6m)
  • and rising income (+36K)

The research highlights that it sees $850bn of additional income in the system to support mortgage, rent and other living expenses.

Monthly rents are 30% cheaper than alternate buy options at current prices.

Mean-reversion of interest rates, to say 2-2.5% level, could see relative rental affordability retained as capital values rise.


CBRE forecasts that the future supply of apartments to range from a high of 80,000 (which is expected in 2026) to as low as -60,000 in 2024 and 2027.

Australia's forecast population growth requires an apartment supply of -75,000 pa to avoid further falls in vacancy.

As for the capital cities:

  • Sydney: Apartment delivery to average 14,000 pa over 2024-28, well below 33,000 pa demand for housing stock. Vacancy rate is set to fall from 2.2% to 0.8% and average rent growth of 6% pa to 2028.

Sydney Apartment Demand Vs Supply

  • Melbourne: Apartment delivery to average 10,000 pa over 2024-28, nearly 40% below Sydney. Demand for housing stock (apartments and communities) is likely to average 38,000 pa over the next 5 years. This should continue to drive down city-wide vacancy from 1.7% to 0.9%.

Melbourne Rental Demand Vs Supply

  • Brisbane: Apartment delivery to average 6,500 pa over 2024-28. Demand for housing stock (apartments and communities) is likely to average 16,500 pa which will drive down city-wide vacancy from 1.1% to 0.8%.

Brisbane Apartment Demand Vs Supply

Construction and capital value

According to CBRE's data, historically, capital values have grown at 3x construction cost growth.

Clearly, this unlocks land and encourages supply.

However, in the past 3 years, construction costs (+37%) have outstripped value growth.

CBRE highlights that capital value projects will accelerate significantly higher to ensure a healthy ecosystem for developers.

Rent outlook

According to CBRE's research data, median rents are expected to grow by $120 per week between 2023 to 2028, across 53 precincts in Australian capital cities.

The research forecasts growth will be nuanced:

  • 15 precincts could see +30% growth over the next five years, including Sydney's Eastern Suburbs, Parramatta, Melbourne North, and almost all precincts in Brisbane and Perth City.
  • On the other hand, rent growth could be at or below inflation (15% to 2028) across 7 precincts in the capital cities.

Apartment Rents 2 Bed Across Australian City Precincts

CBRE highlighted that in 2013, just four precincts in Australia had an average rent of over $600 per week.

These included Sydney and Perth CBDs, Lower North Shore and Eastern Suburbs.

In June 2023, this had grown to 20 precincts and by 2028, it is expected to rise to 38 precincts or over 70% of Australian 2-bedroom apartments to have a rent exceeding $600 per week.

Vacancy outlook

CBRE forecast that capital city vacancy will fall to 0.8% by 2028 from 1.8% in 2023.

The research noted that by the late 2020s, it is forecasted that apartment vacancy will be at one-third of the previous decade's average of 2.5%.

It was also further noted that a balanced market for apartment rentals would typically see vacancies around 4-5%.

Vacancy Outlook Across Australian City Precints

For most markets, vacancy has remained below 4% during the previous decade, except during the lockdown periods in 2020-21.

To balance the market, CBRE estimates an incremental -90,000 apartments are needed, over and above the current absorption rate.

It is forecasted that the annual absorption rate of houses and apartments is c170k-200k pa.

Some of the markets that are expected to see the sharpest falls in vacancy include:

  • Close proximity to Sydney CBD, including Inner West and Lower North Shore
  • Melbourne's Inner East and South East suburbs, including Bayside
  • Brisbane's South East and North Gold Coast suburbs
  • North Canberra

The vacancy situation is already extremely tight (sub 1%) in large parts of Adelaide in Perth.

It is expected that this tightness will continue over the next five years.

About Leanne Jopson Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years' experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.
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