Sydney apartment construction still strong in 2015-2017
According to a new report from global property services firm JLL, the number of multi-unit dwellings in Sydney until late 2016 may actually exceed the total number of apartment completions during the 2012-2014 period.
As many as 61,000 brand new units could be completed between 2015 – 2017, according to the ‘Sydney Apartment Market Indicators’ report which based its results on projects housing 50 units or more.
However, according to JLL’s probability weighted figures, it is more likely that the true number of apartment completions over the 2015 – 2017 will see 46,500 completions. This figure is based on the likelihood of each project completing on a scale of “proposed” to “under construction” alongside the figures from the 2012 – 2014 period.
Between 2012 - 2014 there were 44,500 net completions of multi-unit dwellings, according to the NSW Department of Planning and Infrastructure’s Metropolitan Development Program.
Rupa Ganguli, JLL’s Director of Residential Research stated, “The Sydney residential market continues deep into the eleventh hour of a housing upturn, as sellers take advantage of continued capital growth and buyers look for opportunities in a market offering plenty of choice in housing stock. Interest rates have remained stable and this reflects the general ‘wait and see’ approach that investors are taking.”
Mrs Ganguli also added, “Based on our projections of the apartment supply pipeline, our view is that supply in the new apartment market will continue to meet buyer demand for multi-unit dwellings until at least the end of FY2016. An undersupply in the Sydney market since even before the turn of the decade will not be corrected overnight.”
The report also predicts that Parramatta will also see a greater level of apartment construction in the next couple of years, helped by the regeneration plans that Parramatta will be experiencing and Ganguli also expects the number of apartments here will continue throughout this regeneration phase.
“From 2015 to 2017 the Parramatta Local Government Area (LGA) will account for 8% of new apartment supply, which is 7% short of the share going to City of Sydney LGA.”
She also commented, “This gap is slowly closing, considering that between 2012 to 2014 18% of new apartments were completed in City of Sydney LGA, as opposed to Parramatta LGA’s share of 9%. This gap of 9% has closed to 7% and we expect this trend to continue.”
But it’s not just Parramatta that is experiencing construction of brand new apartments. The Greater Sydney region, in particular Auburn, Blacktown, Hornsby, Rockdale and The Hills are all seeing more supply of new apartments. This is mainly helped by numerous infrastructure and transport projects occurring in these areas as well as affordability outside of Sydney inner-ring.
According to Tyrone Hodge, JLL’s National Director of Valuations and Advisory – NSW, there are other areas in Sydney that are seeing greater number of site sales.
“Distinct concentrations of site sales are appearing across major transport lines such as UrbanGrowth's Central to Eveleigh corridor, the Northern and Western Line linking St Leonards through to Hornsby, Stage 1 of WestConnex between Parramatta and Haberfield, and the North West Rail link as a part of The Hills Corridor Strategy by the NSW Department of Planning & Environment,” he said.
In spite of this, some of Sydney’s inner-ring suburbs are experiencing a higher level of apartment construction activity, according to Tyrone Hodge, JLL’s National Director of Valuations and Advisory – NSW. He said, “Waterloo, North Sydney, Botany and Surry Hills – these suburbs in the inner ring within 10 km from the CBD have recorded the highest number of residential development sites purchased in 2015 to August.” This higher level of activity is mainly due to the construction of major new transport lines.
Unsurprisingly, apartments within Sydney City and Inner East which have city and water views have experienced strong price growth.
Published on 16th of November 2015 by Marty Stanowich