Build-to-rent boom: Are investors being driven out of the apartment market?

This represents a substantial 7 per cent increase (or over 200,000 lots) from the previous report’s 26 per cent share out of a total of 2,869,845 lots two years ago.

Data from the report, which provides an up-to-date snapshot of the trans-Tasman strata industry every two years, conservatively estimated that at least 16 per cent of Australians live in strata-titled properties, with 10 per cent of the population in apartments and 6 per cent in other strata dwelling types such as townhouses, retirement villages, holiday parks, and strata-titled detached housing.

However, the report noted that total figures are potentially as high as 26 per cent.

“Both Australia and New Zealand have seen rapid growth in strata-titled dwellings, both in the last decade, and as this research shows, in the last two years,” Professor Hazel Easthope, who led the research project team at UNSW, said.

Strata Community Association (SCA) national president Chris Duggan said the rapid shift in Aussies’ priorities in recent years is fuelling the growing popularity of strata living.

“In 2023, people value access to work, shopping, entertainment and recreational amenity more than any other time in our history, and strata living is leading the charge to fulfilling these needs,” he explained.

“Strata living serves as both a preferred housing choice for discerning owners wanting best-in-class location and amenity and also as a cost-effective entry point to the market, whether rental or ownership, providing immediate answers to the cost-of-living crisis and housing affordability as more stock enters the market.”

Data also showed almost half (47 per cent) of strata-titled tenants rent, 12 per cent own outright, 16 per cent own with a mortgage, while 17 per cent are unoccupied.

Notably, the ownership figures also reflect other data showing a trend away from purchases by investors of apartments increasingly towards owner-occupiers — a trend seen to continue as the BTR sector continues to gain popularity.

“We will see this trend towards increasing proportions of owner-occupiers continue,” Professor Easthope told the Australian Financial Review.

She added a surge in BTRs will see a boost in supply and will consequently contribute to a higher proportion of owner-occupiers in strata as more renters move into purpose-built rentals.

Notably, a separate report from think tank Australian Housing and Urban Research Institute (AHURI), which was also co-authored by Professor Easthope, also showed private investments in the sector is declining, with purchases of new off-the-plan apartments by investor buyers declining from as much as 60 per cent to 20 per cent by 2019.