Sydney’s high-rise apartment bust deepens

Sales of residential development sites in Australia fell by 38% to $5.1 billion in 2018-19, according to Knight Frank. This decline nationally was driven by Sydney, where site sales fell by 50% and average site values fell by 12% – more than double the decline in Melbourne:

The slump – from $8.25 billion of sales recorded in fiscal 2018 – was led by Greater Sydney, where the value of sales of development sites suitable for high-density projects (25 or more apartments and more than four storeys) halved to $1.97 billion (out of a state total of $2.7 billion)…

Driving the 38 per cent national fall was reduced demand from overseas investors, especially in Sydney, where they accounted for just 11 per cent of total site sales. Across Sydney, average site values fell 12 per cent to $184,000 per apartment, more than double the fall in Melbourne…

The collapse in high-rise site sales and prices follows a similar-sized crash in approvals:

As shown above, NSW high-rise apartment approvals tanked by 38% over the year to August 2019, and have collapsed by 52% since peaking in September 2016.

Given the two-plus year lag between high-rise approvals and completions, Sydney is facing an almighty construction bust that will likely run well into 2022.

Unconventional Economist

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