Australia’s Housing Market Trends: Build-to-Rent and Adelaide’s Property Surge

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Australia is currently witnessing two significant trends in the housing market: the rise of the build-to-rent (BTR) model and a surprising surge in Adelaide’s property market. These developments promise to have far-reaching implications for the country’s housing crisis and real estate investment landscape.

Stephen Miles recently noted in his article, “Why build-to-rent could be the best fix to the housing crisis,” that the BTR model, which has become increasingly popular overseas, is beginning to take hold in Australia. In this model, developers construct and maintain major building complexes, renting the units to tenants instead of selling them as individual properties. This approach markedly increases the supply of available rental properties, potentially capping rental prices, particularly as more BTR sites come to the market.

Miles cited the example of Aware Super and Australian Super, two large institutional investors with substantial commitments to the BTR market. Furthermore, he mentioned overseas companies like US-based Greystar, which already has six Australian projects underway, totaling over 2500 BTR units1. Chris Key, managing director of Greystar Australia, is optimistic about the potential impact of their projects, stating, “Greystar is creating new rental housing supply when it is urgently needed in Australia’s capital cities and, as long-term owners and operators, we have an interest in providing security of tenure for our residents”.

Another key player in the sector is Mirvac, with plans to construct over 2000 apartments across Sydney, Melbourne, and Brisbane. However, Miles stresses that although the BTR model is gaining traction, it may not completely solve Australia’s housing crisis, but it is undeniably “a big step in the right direction”.

Meanwhile, Anna Porter, in her article, “The surprise state coming out on top of the property ladder,” highlights the unexpected surge in Adelaide’s property market. According to CoreLogic, Adelaide’s house prices are 44 per cent higher now than they were at the end of March 20202. This growth in property value surpasses even that of Sydney, indicating Adelaide’s emergence as a significant player in Australia’s real estate market.

Porter attributes this growth to factors such as high rental yields, low vacancy rates, and a large infrastructure spend2. Stability has been key to Adelaide’s market success, with a diverse employment sector and strong rental markets. Porter notes, “Adelaide is a very fundamentally stable market. It has a huge infrastructure pipeline, employment diversity, strong rental markets and population growth”.

This analysis of Adelaide’s growth suggests that the city’s property market might become increasingly attractive to investors, given its stability and ongoing growth. Both the BTR model and Adelaide’s property surge could contribute significantly to alleviating Australia’s housing crisis and transforming the country’s real estate landscape.

References:

[Miles, S. (2023). Why build-to-rent could be the best fix to the housing crisis.] https://www.smh.com.au/business/companies/why-build-to-rent-could-be-the-best-fix-to-the-housing-crisis-20230707-p5dmj4.html

[Porter, A. (2023). The surprise state coming out on top of the property ladder.] https://www.apimagazine.com.au/news/article/the-surprise-state-coming-out-on-top-of-the-property-ladder