It happens every property cycle.
Developers get carried away and build too many properties, or at least they build too many of the wrong properties in the wrong locations and some (in fact many) investors lose out.
And it’s happening again right now.
The latest CommBank Property Insights estimates that 80,000 apartments are under construction in Australia’s major capital cities and another 117,000 are in the pipeline, either approved or being marketed off-the-plan.
And the bulk of these are in central Melbourne and Brisbane.
If history repeats itself, and it usually does, many of the purchasers of these properties will wait well over a decade for capital growth and rental growth.
Not so bad in Sydney
Even though the strong Sydney property market has slowed, its broader geographic spread of completions, and a greater depth to the buyer and occupier market, would likely mitigate the risks in the harbour city.
The report noted that while Sydney has 38 per cent of Australia’s population, the city only has 33 per cent of the national apartments proposed or under construction.
The Sydney apartment building boom is also more widespread, with only 7 per cent of the apartments in the CBD – and 23 per cent in western Sydney.
Here’s where the construction is occurring:
Read more at the Australian Financial Review