Apartments – undersupply or oversupply – what’s really going on?

What’s happening to the stock levels in our property markets? Last week we took a good look at housing stock around the nation.

Now let’s see what’s going on with apartments and townhouses – how much stock is there on the market, and where?

Less than 70,000 apartments/townhouses were up for sale last month, an increase of 1,800 or 3% – the same percentage rise as for houses.

The figures show apartments are starting to sell faster than they are being replaced in Perth (down a whopping 440 or 12%), Darwin (down 127, an encouraging 20%) and also in Brisbane.

In contrast, the rest of the capitals all recorded a rise in stock on the market over the last 12 months.

Hobart’s having a shocker, with a 31% rise (equivalent to 160 apartments), and Canberra isn’t far behind with a 24% increase (an extra 252 apartments). Adelaide and Melbourne jumped by 7% and 8% respectively – while Sydney saw no change.

In the regions, Victoria and WA were the biggest movers into positive territory, up 18% and 11%, while SA’s apartment stock on market dropped by 28% (279).

But what does this all mean when we take into account stock on market as a proportion of all attached housing stock in each area?

As we said last week in relation to detached housing stats, we believe a turnover of between 4% and 6% for apartments is normal; anything less than 4% is a bit tight or undersupplied.  Anything over 6% is obviously a bit oversupplied.

So, that means the under supplied apartment markets are:
Sydney and Adelaide (both 2%), Perth and Brisbane (both 3%) and regional NT (3%).

Housing markets at equilibrium are:
Melbourne and Darwin (both 4%), Hobart (5%), regional SA (4%) and regional NSW (5%).  The problem with Melbourne isn’t its overall amount of apartment supply on the market but where and what that supply is.  Too much of Melbourne apartment supply is in and around the CBD and rents out to a very narrow market segment – overseas students; also many of the new apartments for sale are way too small and do not allow tenants to share.

The oversupplied markets are:
Canberra(9%), regional Qld and the rest of Tassie (both 7%), regional Victoria (10%) and regional WA (11%).

Surfers Paradise wins the Top Ten Improvers by postcode 2012, with the biggest drop in apartments on offer (down 373 or 24%).

Brisbane’s CBD was close behind (down 311 or 56%).  Still plenty to choose from in Surfers though, with over 1,200 apartments on offer compared to less than 250 in Brisbane’s CBD.  Remember, we are talking about resale and off-the-plan supply here.

Sydney’s Ultimo saw a 60% drop (down 201) and Sydney’s CBD also dropped 18%. Portland in Victoria dropped 93% (it featured on the housing list too) while Melbourne’s CBD just scraped into the top ten.  East Perth and Perth’s CBD were the best performers for WA, with 41% and 22% fewer apartments on offer than this time last year.

The Top Ten Losers
was led by Beaudesert, south of Brisbane, up 34% to 376 in August 2012.  Fellow Queenslanders Pimpama and Karana Downs also jumped – Pimpama by a dramatic 273% (up 82).

Dandenong and Lakes Entrance in Victoria leapt up by 144% and 85% respectively, while Toongabbie East in Sydney recorded an extraordinary 929% rise (72 apartments on the market from practically no stock in August 2011).  Adelaide’s CBD stock jumped by 313% and Bunbury in WA rounded out the bottom ten with a 164% rise and 95 apartments on the market.

Well, now you know how much housing and apartment stock is ready to go for Spring – and where.  Now it just has to be sold!  Revisit our how to sell in a tough market missive from a few weeks back.

PS – Thanks heaps to SQM Research for access to their latest stock for sale excel spread sheets.

For more stuff visit our website and follow me on twitter, plus connect viaLinkedIn.  Listen to me on Kevin Turner’s Real Estate Talk or his 4BC1116  Saturday program.

…………………………………………………….

Michael Matusik is the director of independent property advisory Matusik Property Insights and writes the  Matusik Missive which is free, however, reprinting, republication or distribution of any portion of this material, or inclusion on any website, is strictly prohibited without the written permission of Matusik Property Insights and may incur a charge.

 

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Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive


'Apartments – undersupply or oversupply – what’s really going on?' have 1 comment

  1. Avatar for Property Update

    October 2, 2012 Pete Wargent

    Eye-opening stats from Michael.

    Reply


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