March 5, 2016 | Disconnect Between Apartment Supply & Demand
Increasingly a topic of discussion, the stream of new apartments into Australian capital cities has become a cause for concern as lending institutions tighten criteria and squeezed investors abilities to purchase amid fears of a looming oversupply.
CoreLogic’s Cameron Kusher:
“Looking at the expected new unit supply, Sydney and Melbourne predictably have the greatest increases in stock over the next two years. If you compare the volume of stock expected to settle over the next 12 and 24 months to the average number of unit sales annually over the past five years, you can see a big disconnect, particularly in the four largest capital cities,” Kusher said.
“The historic sales figures include sales of both existing and new units keeping in mind that new stock, usually accounts for a smaller slice of total sales than resales of existing stock. The large volume of new stock, coupled with an ever-growing supply of existing stock which resells means that historic high levels of unit settlements are due to occur over the next two years in most cities,” he said.
Corelogic data (shown below) indicates that the past 12 months saw 96,195 new and existing apartments sold, while the 92,102 new apartments will be settled over the subsequent year.
Source: CoreLogic
At a time where options are plentiful and the appeal of owning an investment property is high it’s imperative to make strong and calculated decisions when it comes to purchasing a property.