Apartment supply shortage. There is a significant fall in the number of new apartments within the process of pre-sales or under construction stages. The apartment supply shortage is very evident and will continue further in 2021-2022.
At present the demand is highly outweighing the apartment supply. The demand has been fuelled by the fact interest rates are at historic lows and there are a variety of government grants for first home buyers & owner occupiers. Lending has also eased from the pre-government election in 2019, while off the plan stamp duty has also been reduced for a short period of time. The government has really supported Australians to buy into the property market in wake of a recovery from the global pandemic covid-19.
Unfortunately this recent recovery hasn’t seen property developers bring forward their apartment developments. The pipeline of new apartments also looks to be trending down.
The year 2020 wasn’t pleasant for anyone, but property prices found their grove. In the last quarter of December 2020, priced performed extremely well with double digit returns. Auction clearance rates also remained steady.
With an increasing population, its likely to see property demand continue to outweigh supply and place further upward pressure on prices, meaning its likely prices will continue to increase into 2021-2022.
Melbourne completions over time
*Graph is courtesy of CBRE
Melbourne’s previous building activity
It’s anticipated that Melbourne requires approximately 50,000 new properties each year to accommodate the increasing population. During 2019 there were approximately 6,300 new units. This was half the number of new units during 2018 and makes it’s a fifth consecutive year of declines that were as high as 23,400 in 2014.
Apartment supply shortage
There is no doubt an Apartment supply shortage. Buying an apartment has presented a mix of emotions to local Australians but it’s been an excellent stepping stone for first hole buyers wanting to start their independence without compromising on location. Savvy investors have also experienced great investment returns, strong rental yields and low maintenance. Apartments have seen good capital growth over the longer term but it will be interesting to see how prices will go as the Apartment supply shortage continues in 2020-2021.
If you are looking for an apartment to invest or occupy please don’t hesitate to contact us. We specialise in sourcing brand new and off the plan property for buyers.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
February 2021
