This article is from the Australian Property Journal archive
CONTRARY to popular market commentary, Meriton boss Harry Triguboff says Sydney is not building enough apartments to meet demand, which will have a flow-on effect and push prices higher in the year ahead.
Triguboff said that high house prices were driving demand for apartments from owner‐occupiers and tenants, resulting in stronger than expected gains already this year.
“Today we are in a situation where the apartment supply this year is not, I’m afraid, likely to meet the demand and that can mean only one thing – buyer competition forcing prices higher.
“Sadly, many mooted projects that were due to start by other developers have not and some of them never will start due to regulatory and financial restrictions,” he added.
“Unless developers have plenty of equity and a strong book of solid pre‐sales, the banks won’t bankroll them and sites will sit derelict,” he continued.
Recent figures show Sydney house prices rose by 15.5% in 2016 and have increased by 2.7% in January.
Trigoboff’s comments echoed the Urban Taskforce chief executive Chris Johnson, who last week said the supply of new apartments was not enough to meet the market, with an estimated 37,000 needed a year when only 31,000 were built last year.
Triguboff said this was a 20‐year average requirement.
“At our peak, we are still behind the average,”
Triguboff said the rise in Sydney apartment prices stalled for a period last year when banks tightened up on lending, which stalled Chinese buyers of Sydney apartments, albeit temporarily.
“We seem to have worked our way through that situation, offshore buyers are again very active, lending to investors is up, and we are pleased to see many more Australians buying apartments.
“There’s no doubt that the low interest rates, from two angles, are a big factor. For many owner‐occupiers, the cost of money means buying is cheaper than renting. For investors, the return on renting out a new apartment is much better than depositing it with a bank,” he added.
Meriton director of James Sialepis said the group expect to sell 2000 apartments this year.
“But that number could have been higher if developments were able to get approvals faster,” Sialepis said.
Australian Property Journal
