A new report from Knight Frank Research shows that the total value of offshore investment in Australian residential property fell below $500 million in 2020 – the lowest level in seven years.
This was a key driver of a 19.6% decline in property developers’ investment in residential sites, which fell to just $4 billion amid the COVID-19 pandemic. The sharp fall in investment in development sites will in turn affect the pipeline of new apartment projects over the next several years.
Shayne Harris of Knight Frank says developers are now shifting their focus to boutique apartment projects and low-density developments:
Concern is now mounting over forward work schedules. Just 86,400 new apartments are planned across Sydney, Melbourne, Brisbane, Gold Coast and Perth until 2024, a stark contrast to the 135,300 new apartments built in the three years prior…
[Property Council] Chief executive Ken Morrison said 30,000 jobs could be at risk across the country.
“Apartment construction is a critical component of Australia’s future housing supply and a vital job-creator for our economy”…
The apartment market is obviously facing stiff headwinds from the collapse of immigration and international students, alongside the switch in preference towards detached houses. Sydney and Melbourne have also begun to lose population to other jurisdictions where houses dominate.
The impact is most clearly apparent in the high-rise apartment sub-market where approvals have collapsed across all major markets, as illustrated in the next chart:
High-rise apartment approvals have collapsed across every major market.
Nationally, high-rise approvals are down around 57% from their October 2015 peak.
Now doubt most residents of Sydney and Melbourne would welcome this Knight Frank Research report. They are sick and tired of poorly built high-rise apartments blighting their cities.
