With development site activity “white hot” across Sydney, consideration of affordability and viability start to raise concern. A weight of money both domestically and internationally for quality residential development assets has quickly driven sales of development sites more than 120% on a per site basis over the year or two, now averaging $180,000 per unit site for the inner and middle rings, within a broad range up to $300,000 or even $1 million for super prime locations. Big, small, infill, alternate use, raw or with DA’s, no property has been off limits for developers capitalising on this glut of buyers looking to invest in Sydney. Median apartment prices have similarly moved north with the March quarter Sydney total apartment price $541,000 however preliminary numbers for June look like it may start to level out. Yet the spread between old stock and new is vast, with the average new 2 bedroom apartment in the Sydney metropolitan area achieving upwards of $750,000. Despite these increases in end product, the gap between the site price per apartment basis versus the end sale price is closing.
With all the attention and interest in Sydney, what about our northern neighbour? Brisbane is going through a rejuvenation in the Inner suburbs with changes to planning and increased investment activity seeing demand at unprecedented levels. Developers also are keen in this part of the world but to date the value increase of development sites has not been as rapid. On a per unit basis, development site sales within Inner Suburban have hovered around a steady price for the last ten years until very recently. Ranges do move up and down yet the overall average has remained around $50,000 until this year (with some more recent movements higher in super prime locations) but now Brisbane is starting to following Sydney’s lead as foreign and more domestic money moves in. Despite this recent movement, Brisbane sites still appear cheap by Sydney standards particularly as the median apartment price has shown some recent uplift after a prolonged steadiness. The market shows contrast between the old and new product, with new 2 bedroom apartments ranging from $580,000 to $650,000, a strong premium on the older existing market. Starting off a lower base, scope for growth is strong particularly given the increased interest from interstate and foreign investors in the city. The margin between site price per unit in Brisbane and site price per unit in Sydney is not commensurate with the price differential of the off the plan unit sales between the cities. Consequently, Brisbane is now attracting interest.