The residential landscape in Australia is in a transformational churn driven by rising interest rates, demand-supply gaps, affordability, cost of living, and very importantly, the increasing preference for apartment living over detached housing.

The pandemic and its aftermath saw people scrambling for space in their residences to accommodate the new work-from-home lifestyle. While remote working has transitioned into hybrid working, the need for a workspace – among other amenities – within the home continues to shape the design of new houses and apartments.

But what’s driving this preference for apartments? And what are buyers and renters seeking in their apartments?

The ideal suburban dream of a detached house is no longer affordable for many Australians. Borrowing capacity topped the list of considerations among home buyers looking to purchase a new home, according to a NAB residential property research report released in October 2022.

“A trend we are seeing emerge from the pandemic is more Aussies considering apartments over houses for the first time since the survey began, driven by return to office working and caution on borrowing amounts,” NAB Executive Home Ownership, Andy Kerr says.

“Affordability and rising interest rates are absolutely part of the equation for home buyers,” he adds.

The Australian Apartment Market Overview 4Q22 report by Jones Lang LaSalle (JLL) says the apartment market catering to downsizers has remained robust. The demand for apartments is also supported by owner-occupiers drawn to the affordability of apartments relative to detached houses, as well as the return of migrants and foreign students, though investor demand continues to be impacted by the higher interest rates.

With flexible working here to stay, location in terms of access to shopping, restaurants and other amenities is an important factor, and so is the size of the home.

Australian Apartment Advocacy’s 2021 Apartment Survey revealed that location was the leading motivator for 84% of residents while 57% chose apartment living for the lock-and-leave lifestyle. Walkable access to shops, cafes, public transport and parks was also cited by apartment dwellers, underlining the importance of location.

Buyers, especially from the downsizer and owner-occupier segments, are also increasingly seeking larger apartments to accommodate their lifestyles.

Leading luxury apartment marketing agency TOTAL Property Group’s managing director Adrian Parsons observes that home buyers are increasingly choosing larger apartments over houses in prime inner-city locations. Attributing this shift to the rightsizing trend as well as the pandemic that forced people to work from home, he noted that residential developers are designing larger apartments to accommodate changing lifestyles as “people seek more space to work and relax in their homes”.

Sharing her perspective on the Australian residential landscape for 2023, Erin Van Tuil, head of residential, Knight Frank Australia lists out two key trends in the apartment sector – rightsizing and co-primary living.

Rightsizing involves “downsizing from a significant standalone house to large luxury apartments in the city with house-like proportioned living areas”, says Van Tuil. Developers are now addressing this demand by building more homes catering to this top-end of the market.

The co-primary living trend, which Van Tuil says emerged in the wake of the pandemic, came about as more people began to divide their time between multiple homes. “This often involves maintaining an apartment in the city for work and another home in a coastal or rural area for leisure. With the rise of remote work and international travel, people have more flexibility to spend time in multiple locations,” she explained.

The pandemic years saw an increase in the demand for dedicated activity spaces and outdoor living areas in the home – these design preferences continue to be prioritised by buyers in the residential apartment space. Additionally, communal spaces that allow residents to socialise and have shared experiences are attractive drawcards.

Quality of life is a significant consideration, with apartment residents motivated by premium lifestyle offerings such as communal gardens, swimming pools, rooftop entertaining areas, BBQ facilities and gyms, says ESM Strata in their trends report on the future of apartment living.

Another interesting trend among apartment dwellers, especially renters, is an increasing preference for three-bedroom apartments over two-bedroom units as a larger apartment allows them to share skyrocketing rents with other tenants.

Speaking to AFR, Place Studio co-founder James Alexander-Hatziplis explains that home buyers who have been priced out of the housing market are considering apartment living, provided it delivered similar advantages such as a third bedroom that could be used as a study or an extra living room, more living space, rooftop cinemas and shared event spaces, spas and managed gyms, flexible workspaces, storage, and winter gardens among others.

The build-to-rent sector is also navigating a rapid growth path with these developments increasing by 30% since 2019, according to Urban Development Institute of Australia.

Fieldworks House, a new build-to-rent development designed by i2C Architects in Oakleigh South in the City of Monash, offers 171 high quality apartments supported by various indoor and outdoor amenity spaces, as well as a dedicated coworking space for residents.

“The past 18 months we’ve seen an increase in people who are choosing a more flexible work/lifestyle balance and opting to spend more time within their local neighbourhood,” says associate and residential lead at i2C Architects, Marcus Greening.

“Flexible coworking spaces are balanced with high quality indoor and outdoor recreational facilities, providing residents a choice in how they live, work and play in their community,” he adds.

Image source: Brisbane | JLL (jllapsites.com)

Branko Miletic

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