[Podcast] Crisis or Opportunity? Navigating Australia’s Apartment Drought with Richard Temlett

Over the past few years we've witnessed a whirlwind of changes, particularly in the mortgage market.

Mortgage rates have skyrocketed, soaring from 2.9% in April 2022 to a staggering 6.4% today.

And if that wasn't enough, the rental crisis has reached new heights, with vacancy rates plummeting to record lows nationwide, causing rents to skyrocket.

In the face of these mounting pressures, purchasing an apartment has become a viable solution for some.

However, this seemingly attractive option comes with its challenges with a severe shortage of apartments nationwide.

It’s a topic at the forefront of discussions among investors, developers, and policymakers alike.

To unpack this further, I'm joined by Richard Temlett, the National Executive Director of Research at property consultants and valuers Charter Keck Cramer.

We'll explore the dynamics of the current apartment market, understand the factors driving the shortage, and dissect the trends in both the build-to-rent and build-to-sell sectors.

Whether you are a property investor, apartment owner, or Real Estate enthusiast, I’m sure you will get some benefit out of our chat today.

Australia's property market and the apartment evolution

In today’s chat, we shed light on the challenges of the Australian apartment market.

We talk about the market's response to recent disruptions and the resulting implications for both the build-to-rent and build-to-sell sectors.

• Background on Charter Keck Cramer
• Where Charter Keck Cramer sees Australia’s apartment markets
• The Australian apartment market is facing significant challenges with soaring mortgage rates and a critical shortage of apartments
• Factors contributing to the current state of the build-to-rent and build-to-sell sectors
• Developers in the build-to-sell market are balancing the risks and the need for pre-sales to secure bank financing
• The market evolution has seen a shift in focus towards owner-occupiers and right-sizers, along with buyer hesitancy
• Construction quality concerns have become more prominent due to publicized building defects
• There's a projection of a prolonged housing and rental crisis stemming from an anticipated undersupply of dwellings
• The emerging build-to-rent model offers a lower-risk investment option with multiple income streams
  • However, it faces high construction costs and financier reluctance
• Demographic changes are influencing the growing trend toward apartment living
  • This requires innovative financing models to adapt to new buyer behaviours
• The future of property investment and development relies on navigating a rapidly transforming landscape and understanding long-term market evolution

With a strategic focus on investment and development, this episode provides a wealth of knowledge for anyone interested in the property sector.

Links and Resources:

Michael Yardney

Richard Temlett - Charter Keck Kramer

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Some of our favorite quotes from the show:

“In the build-to-sell apartment market, developers take on a risk, but they also take on a lot of finance, and banks are usually not prepared to lend for new apartment developments until there's a level of pre-sales, in other words, assuring that the project's going to be financially viable.” – Michael Yardney

“So, despite the will of governments to get home building activity moving, it just seems there are just too many obstacles in the way.” – Michael Yardney

“I guess many of us suffer a self-entitlement syndrome. Entitlement gets us nothing but heartache.” –Michael Yardney

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