Michael Bleby reporting today on the latest data from Urbis which found the average cost of a new apartment has risen to a staggering $19,000 per m2 across Australia.
Let's translate this into some real figures for small apartments: • 50m2 1 bed for $950k • 70m2 2 bed for $1.3m • 90m2 3 bed for $1.7m
💰Hardly what you would deem affordable, and certainly not when compared to the alternatives.
Now, I suggest this data is a skewed upwards given the apartment market has continued to predominantly target the premium, owner-occupier end. That segment continues to be the only part of the market which remains #feasible for apartments given development costs.
But it is almost impossible to materially reduce costs on new builds to the point where they become #attainable to the lower and mid-markets. Think a few $thousand per m2 maximum, to around $15,000 at the low end to remain feasible.
Any project that stacks up is worth pursuing for new supply, but this typology will deliver only a small fraction of overall housing need due to cost.
This is why the Department of Transport and Planning and NSW Department of Planning, Housing and Infrastructure particularly have their housing plans and priorities fundamentally wrong if they really want to deliver on their #housingtargets .
📈Sure, programs such as DFU or HDA might push through more higher-density approvals on paper – which makes the numbers look better.
But the number of actually built will be constrained by demand which remains dampened given price points.
🤔Watch as approvals rise somewhat over the coming period as commencements lag.