Are we building too many apartments in Sydney?

One of the reasons Sydney’s property market has performed so well over the last few years is the shortage of good quality properties in our inner and middle ring suburbs.

But this is likely to change…

According to new research from Knight Frank, there are 26,680 apartments currently under construction or on the drawing board in Sydney.

Now that’s going to change the supply and demand ratio!

Just to put things into perspective…

Let’s compare what’s happening in Sydney to what’s happening down south where there are regular suggestions that segments of the Melbourne property market are oversupplied.

If you look at what’s happening there you’ll find that Melbourne currently has only 12,600 apartments under construction. 

So now it’s Sydney’s turn…apartment_001

Sydney had endured a long period of undersupply, but strong capital growth over the last few years plus predictions of solid population growth in metropolitan Sydney – projected by the ABS to be 1.7% per annum out to 2029 – has lured developers back into the market.

Knight Frank’s residential research shows that:

  • There are 26,680 apartments currently under construction in metropolitan Sydney
  • Sydney’s North West region dominates the mix with 9,890 apartments, followed by the Sydney CBD and South regions with a combined 8,200 apartments.
  • The North West region has the highest volume of apartments under construction and includes Parramatta (1,640) and – in line with the Urban Activation Precincts – Macquarie Park (600), Sydney Olympic Park (585), Wentworth Park (580) and Epping (524).
  • In the South West region, coupled with North, 8,585 apartments (just over 32%) are under construction.

Yet there is a shortage of well located established homes and apartments in Sydney’s inner and middle ring suburbs with demand outpacing supply, keeping auction clearances high and prices strong.

As I see it…investors should avoid those locations where there is likely to be an oversupply of new apartments or the lure of buying “off the plan.”

What’s the alternative?

apartments

However currently there are some great investment opportunities to buy established apartments in Sydney’s inner west, eastern and lower North Shore suburbs and adding value through renovations at a time when general capital growth may end up being a little slower.

At Metropole we prefer buying established apartments and to ensure we buy a property that will outperform the market averages we use a 5 Stranded Strategic Approach. 

We buy:

  1.  Properties that will appeal to owner occupiers because they’re the ones that push up property values.
  2. Below its intrinsic value – that’s why I avoid new and off the plan properties, which come at a premium price.
  3. In an area that has a long history of strong capital growth and which will continue to outperform the averages.
  4. We look for a property with a twist – something unique, special, different or scarce about the property, and finally
  5. A property where we can manufacture capital growth through refurbishment, renovations or redevelopment.

By using this strategic approach we minimise our client’s risks and maximise their upside.

Each strand represents a way of making money from property and combining all five is a powerful way of putting the odds in our favour. If one strand lets us down, we have three or four others supporting the property’s performance.

Here’s what you can do about this…

If you want to take advantage of the opportunities our current property markets will offer you now is a good time to consider your options.

If you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team of property investment strategists at Metropole have no properties to sell, so their advice is unbiased.

Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level. Please click here to organise a time for a chat. Or call us on 1300 20 30 30.

When you attend our offices you will receive a free copy of Michael Yardney’s latest 2 x DVD program Building Wealth through Property Investment in the new Economy valued at $49.

Just click on this link to find out more and reserve your place.



Want more of this type of information?


George Raptis

About

George is a Director of Metropole Property Strategists in Sydney. He shares his 27 years of experience in the property industry as a licensed estate agent and active property investor to help create wealth for his clients.
Visit www.SydneyBuyersAgent.com.au


'Are we building too many apartments in Sydney?' have 3 comments

  1. September 3, 2014 @ 2:54 pm Buying off the Plan | Brendan's Blog

    […] to new research from Knight Frank, there are 26,680 apartments currently under construction or on the drawing board in Sydney. Now that’s going to change the supply […]

    Reply

  2. February 29, 2016 @ 9:18 am Jess

    The alternative is to stop bringing in so many people from overseas ie. Overpopulating our cities and to have them buy one of the apartments in the ghost cities lying idle in their own countries.

    Reply

    • February 29, 2016 @ 11:42 am Michael Yardney

      Jes I thought we were bringing them in to work and boost our economy

      Reply


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