Sydney apartment construction set to boom

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By Leith van Onselen

An burgeoning apartment construction boom is developing in Sydney.

Yesterday’s dwelling approvals data from the Australian Bureau of Statistics (ABS) showed the number of apartment approvals hitting a record 25,517 units in the year to February 2014, with the total number of approvals (36,930) also just below 30-year highs when not adjusted for population growth (see next chart).

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Sydney’s dwelling construction market has well and truly shifted away from houses, with the share of approvals in units and apartments hitting a record 69% in the year to February:

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The surge in apartment construction is welcome.

The rate of dwelling construction in New South Wales (read Sydney) has slumped over the past decades, creating a structural housing shortage that has contributed to upward pressure on prices and rents:

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The situation has obviously been exacerbated by the strong population growth experienced in Sydney since the mid-2000s:

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Given the inherent lag between approvals and actual construction, illustrated clearly above, 2014 and 2015 are shaping up as very good years for Sydney home builders.

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Comments

  1. This is great news!

    Almost anything to improve housing supply will provide real benefits to society

      • Perhaps I’m being a bit pessimistic here.

        1) While the dwellings built per 1000 will lift but it doesn’t look like it will be higher the historical average. NSW needs to bring that ratio far higher than the historical average just to make up for the lack of construction in previous years.

        2) The ratio of apartments to houses is astonishing. I strongly suspect most of these are being built for investors rather than first home buyers or buyers looking to trade up or down. Do we have any data on the quality (floor space, etc.) of these constructions? I don’t think thousands of shoebox sized apartments will solve the shortage of livable and desirable properties.

        3) There doesn’t appear to be any falls in property prices linked to this increase in property supply, which leaves me more dejected than anything else and even more convinced the Sydney property market is in a bubble.

  2. More non productive investment in property brought off the plan. Its okay though as prices only ever go up in Australia so it will be a safe as houses investment.

  3. Correct me if I’m wrong, I’m used to it. On the one hand MBers seem to be saying what a disaster all those flats in Melbourne are but what a great thing they are for Sydney.How so? Wouldn’t we be better off shutting the arrival gate at the airport? Tried to drive around the bloody place lately? Time for a benzo.

      • Thanks for the feedback boba lot but a flat is a flat and if they are expensive who would want to live in them if they really had a choice to live in a house like I do and like most people I know did when I was growing up? But given the price of houses around inner Sydney and Melbourne most Aussies on average incomes don’t have a choice. By the way, many homes 45-65 km from Sydney CBD now cost $450- $ 840 or more which means the Labour Parties ” working families” will now spend years in hock to the userers. More pity my country.

  4. Yep, one little problem…… infrastructure.

    A good chunk of those new apartments I suspect are in the inner west? One look out my window and there are no less than 7 buildings near completion. Another 3 or 4 just around the corner. All up I would guess at least 2000 new apartments (many of which are show box meriton crap) and they won’t be included in the quoted in these new approval figures.

    Heres the issue, its all single lane roads around here. There is no use taking the train as it is full every morning and weekend traffic is horrendous. I live 8km’s from Bondi and on a weekend it can take 45mim + to get there.

    The green square re-development is already underway, an area of 273 hectares projecting 40,000! new residents by 2030.

    I cannot begin to fathom what the area will look like post that change, nor can I fathom any other mode of transport other than walk/riding being possible. Noting that high rises are build literally up to the footpath, so there is no land to reclaim for new transport infrastructure.