Is there an oversupply and should property investors be concerned?
In the last few blogs, we have been discussing the game-changing projects now being undertaken in the heart of Brisbane and the Big Australia policy all pointing to the need for more property and opportunity for property investors, so is there an oversupply and should property investors be concerned?
There is little doubt that there are some pockets of short-term concern in our major cities. Fringe suburbs in Sydney are seeing small corrections in some unit prices, inner Melbourne has seen substantial falls in some unit developments and Brisbane units are seeing slight falls in yields in some areas. It’s all very temporary, we have been in much worse temporary over-supply situations before and again the over-supply is in relatively tight pockets where just too much of inappropriate property development has taken place. I use the word ‘inappropriate’ because the vacancy rates are highest in small cheaply-built units that really depend on one and one only selling point – relatively good location. This type of apartment may be popular for students and young professionals leaving home for the first time but they do not attract the owner-occupier or the longer-term tenants wanting a larger space to call ‘home’. When other ‘better’ options are available in a market place, it tends to be the inferior properties that suffer from long vacancy which in turn drives down rental yield as landlords strive to attract fewer renters.
It’s all temporary anyway, and the recent report on Sydney’s population boom makes this abundantly clear; we need more homes for an exploding population. Sydney is now growing faster than predicted putting more pressure on the city’s housing needs.
Rob Stokes, NSW Planning Minister, describes this population boom as a “symptom of Sydney’s success”. Sydney’s population is expected to leap by more than 2.1 million people in the next 20 years – about 170,000 more than predicted only two years ago. In 2014 Sydney was projected to have a population of 6.25 million within 20 years, up from 4.29 million in 2011. The updated projections anticipate a 6.42 million population in 20 years.
It’s planned that 1/3 of this new population will be housed in new high density corridors along major transport routes, one third will be in higher density existing areas and the remaining one third will be housed in our expanding growth corridors, particularly in the west and south-west. In the Camden area in the south-west, the population is expected to rise from 58,000 in 2011 to 224,000 in 2036. In Parramatta the population is expected to double from about 200,000 in 2011 to 416,000 in 2036. The City of Sydney population is expected to increase at a similar rate – from 183,000 in 2011 to 315,000 in 2036. Stark rates of growth are anticipated in the Hills, Botany Bay, Liverpool, and Blacktown.
Over-supply? ….. Maybe in small pockets but for a very short time!
Read more: http://goo.gl/B6cZws
