All part of the property cycle; cracks emerging in Sydney’s apartment rental markets
This report from last week is one of the first we’ve seen but its all part of the property cycle and it can only get worse for Sydney over the short term.
investment property growth in six years time?
Just look back a few ‘blogs’ and you’ll see we have been predicting this oversupply for some months. It is pretty well universally accepted that a property market which is under-supplied, where demand outpaces supply, will witness significant property price increase. The opposite effect, a property market that is over-supplied will see prices level out or correct slightly and all see rental yields fall as landlords ‘compete’ for tenants for their property investment.
There has been a significant upward movement of vacancy rates in Sydney over the last month of up to 0.4% according to Domain. While the over-all vacancy rate is still below what most would consider a ‘balanced market’ of between 3% and 4% vacancy, it is the third major sign of a flattening investment property market for Sydney. The first sign is softening yields or lower rental to put it another way. Yields in Sydney generally are at all time lows as rental increases have not been anywhere close to price growth. The second major indicator of course, was the slowdown of growth and the correction in prices we saw over the first few months of this year. The next obvious sign is the supply now exceeding demand and watching vacancy rates rise, all part of the property cycle!
Parramatta has seen one of the largest rises in vacancy rates but with about 61,000 new apartments completing across the city in 2015 to 2017, over 15,000 more units than completed between 2012 to 2014 vacancy rates will certainly raise more over the next couple of years. The forecast is that vacancy rates will peak around 4%. This figure, if it proves to be true, should not cause a great deal of stress to property investors but it does seem rather low.
Full story here: http://goo.gl/bEseIB
