Steer clear of the highrise glut

One of the most notable aspects of this building approvals boom has been that its focus on the building of high density housing to an unprecedented extent.

If you want capital growth from property then I suggest that you should be wary of high rise stock since proportionately far too much of it is has been approved.

Approvals in most instances do now seem to be pulling back, but the approvals pipeline has seen 4+ storey dwellings pushed through this cycle to date in unprecedented volumes.

In August the number of approvals pulled back in Victoria from 1,766 to as the new levy takes effect, but the 12mMA trendline tells its own story…

vic high rise approvals

In Queensland the number of 4+ storey dwelling approvals at 895 in August was well below the extraordinarily high volumes approved in 7 of the preceding 9 months, and the trendline peak now seems to be in…

qld high rise approvals

Being home to the largest capital city, New South Wales has typically approved the greatest number of high rise apartments, although here too approvals fell from an elevated 3,431 to 1,887 in August…

nsw high rise approvals

Overall it seems that the great flood of approvals of high rise apartments is now easing as developers take note of the looming oversupply.

The problem with the highest density tower blocks for investors is simply that there is no inherent scarcity value.


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Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog

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