Sydney’s ‘ghost tower’ apartment boom

By Leith van Onselen

Just a day after ‘Highrise’ Harry Triguboff’s mouthpiece, Robert Gottliebsen, warned that Sydney is facing chronic apartment shortages and escalating rents due to planning restrictions:

…chaos reigns in both cities [Sydney and Melbourne] because supply cannot be generated to meet looming demand…

In Sydney and Melbourne, with supply unable to be generated in the next year or two, we will be looking at shortages and much higher prices…

With development stopped it is back to much higher apartment prices particularly in Sydney…

The truth has been revealed via The ABC, which warns that Sydney is facing a boom in vacant ‘ghost tower’ apartments:

In Sydney’s apartment market, a perfect storm is brewing.

According to property data agency SQM Research, rental vacancy rates across Sydney hit 3.4 per cent last month — the highest level since 2005, the year it began keeping records.

Vacancy rates in The Hills district — where the Carlingford development sits — hit 5.8 per cent last month, with some parts reaching as high as 7 per cent.

Vacancies in the City of Sydney and City of Parramatta — areas with large numbers of high-density apartments — reached 5.4 per cent and 3.7 per cent respectively…

Data suggests 54,000 new apartments built in Sydney during 2018 and 2019 will be up for grabs by the end of the year, causing an over-supply.

My Housing Market chief economist Andrew Wilson, said it had created what was known as “a ‘ghost-tower’ environment”.

“We’ve come through a massive apartment boom in Sydney, and now we’re at peak supply,” Dr Wilson said.

He said an underperforming market with a lack of buyer activity had been exacerbated by a lack of tenants.

“It’s all combined to create those empty towers.”

It’s not hard to see why. Highrise apartment approvals soared to stratospheric heights in 2016, and given the long lead times between approval and completions, these apartments are hitting the market now:

While high-rise approvals have fallen quite sharply from peak, they remain at elevated levels, which means that apartment supply will remain elevated for several years to come.

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