News Blog - Residential

01 July 2016

SYDNEY’S RESIDENTIAL SUPPLY

A continual hot topic; the supply chain of new homes in Sydney, and in fact major cities across Australia. Barely a week passes without mention of under supply or more recently the threat of oversupply.

Looking at Sydney for a moment Chris Johnson, CEO of the Urban Taskforce notes:

“Even last financial year, Sydney only completed 27,348 homes against a 20 year average target of 33,200″

So whilst there has been a ‘feeling’ of oversupply in some sectors of the market the reality is slightly different. There is a bit more to this though; with APRA’s restrictions on investors brought in late in 2015 the market definitely slowed and it felt like there was more choice for buyers primarily as there were less buyers in the marketplace.

More recently the State Government has elected to bring in a stamp duty surplus charge for foreign buyers. Coupled with local banks essentially shutting the door on financing buyers with no local source of income there is a feeling that buyer numbers could dwindle again.

Contrary to this there is also a belief that these changes won’t have the huge effect on the market that some analysts think. Australia has and will remain a highly desirable property market. Time will tell which side is actually correct.

Another factor in all of this is population growth. It seems as though that is often overlooked although it has a definitive effect on the demand for housing in each state. The below graph shows a positive gain in New South Wales over 2015 behind the ACT and Victoria.

Chart-3-4

The flow on effect of the above is a potential re-think from developers about when to proceed with their proposed developments. Whilst some will persevere as it is critical to their business model I have no doubt that other projects; potentially the larger scale projects will be deferred for a couple of years with a land banking strategy in the short term.

So with the notion of projects being deferred and population increasing is there really an oversupply? Perhaps will we see more of a balance over the next 24 months.

Connect with Rohan here.

Date: 01 July 2016 Author: Rohan Aalders
Residential
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About the author:

Rohan Aalders

With over 13 years experience in the Property Industry, Rohan joins TGC with a fantastic range of professional experience from project acquisitions, feasibility studies to sales and marketing. Rohan has a genuine interest and talent in providing the highest service and expertise, ensuring all clients expectations are not only met but exceeded.

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