Apartment Supply in Sydney - (Look at those Cranes)

[qonyx_sydney]

Hi All,

I'm wondering what peoples opinions are with regards to all this apartment supply that will come online in Sydney in the next 12-24 months.

Most suburbs in the Sydney metro have some apartment development activity going on at the moment. For example when I drive past Liverpool every day I can see about a dozen cranes.

My question for the forum members is whether Sydney can absorb this glut of apartment supply that will come online or is Sydney headed down the same fate of Melbourne where apartment values in certain parts of Melbourne CBD have stagnated for over a decade?

Regards,
Q

 

[Television]

Hi All,

I'm wondering what peoples opinions are with regards to all this apartment supply that will come online in Sydney in the next 12-24 months.

Most suburbs in the Sydney metro have some apartment development activity going on at the moment. For example when I drive past Liverpool every day I can see about a dozen cranes.

My question for the forum members is whether Sydney can absorb this glut of apartment supply that will come online or is Sydney headed down the same fate of Melbourne where apartment values in certain parts of Melbourne CBD have stagnated for over a decade?

Regards,
Q

There's been a ton of new developments going on for about the past 18 months but I think that Sydney as a city is big enough, and the market for buyers is big enough, that there won't be any major stagnation (at least due to apartment numbers).

That being said, apartments just about everywhere in Sydney have had a price increase recently so I think values may slow because of that?

 

[datto]

I like those U shaped apartments at Liverpool. They face north and with the U shape they get the sun all day. OK they overlook the Hume Hwy but they do look nice.

 

[qonyx_sydney]

TV - all those cranes astonish me and i can't help but think 'oversupply' but perhaps you are right. Sydney is big and the supply is spread across almost every suburb.

Datto - are you talking about One Browne http://www.realestate.com.au/property-unit-nsw-liverpool-117452583

 

[Scott No Mates]

From all reports that I have scanned, the rate of growth in Sydney is ahead of the projected completions for units/new land. Unlike other cities, Sydney is the first, and usually last, port of call for new immigrants so the growth stays in Sydney.

 

[datto]

Datto - are you talking about One Browne http://www.realestate.com.au/property-unit-nsw-liverpool-117452583

I think the one I'm referring to is next door at 34 Hume Hwy I guess. Not sure, could be part of the same development. There are not enough photos to be certain.

Its about 10 storeys high, scaffolding still on and no fit out. The units face the Highway. I've walk the circumference of the building site and cannot find one sign as to who the developer is. I couldn't see any for sale sign either.

I think its a great design with the wrap around balcony. The top floor would be big bucks.

I've got an old style 2 bedda walk up, just around the corner near the high school. I'm hoping developers will come along and buy these old blocks up!

 

[GoodDeal]

Considering the current low interest rate, population growth and the stable job market, I think there will be more to come, perhaps at a slower pace though.

 

[qonyx_sydney]

I think the one I'm referring to is next door at 34 Hume Hwy I guess. Not sure, could be part of the same development. There are not enough photos to be certain.

Its about 10 storeys high, scaffolding still on and no fit out. The units face the Highway. I've walk the circumference of the building site and cannot find one sign as to who the developer is. I couldn't see any for sale sign either.

I think its a great design with the wrap around balcony. The top floor would be big bucks.

I've got an old style 2 bedda walk up, just around the corner near the high school. I'm hoping developers will come along and buy these old blocks up!

I'm not quite sure how many IPs you have but any reasons why you didn't chose to buy more.

I remember around 2000 my cousins used to live on Speed St and i remember at these apartments were about 90-100k each and now worth $280k (bear in mind i was a uni student at the time on Austudy)

Ahh the benefits of hindsight

 

[Richard Feynman]

Approvals have been very high for a few years but have started easing back. There's a lag between approval and construction so a lot of that stuff is going to be built in the next 1-2 years.

But Sydney's a big city. It won't be enough to cause a problem, though there are some gluts. The CBD and the south (Mascot, Wolli Creek etc) will have elevated vacancy rates in a year or two I reckon, if not already.

Not that the buyers of half of them will be fussed..

 

[datto]

I got 3 IPs atm, bought n sold others....had 6 including a block of land. Could/should have had 30 by now. The fear factor has slowed me down somewhat. You know the fear of the boogey man jumping out the closet at night ...."aaargghh...you've got too much debt, now I have to eat you". So I had to sell some properties to keep the boogey man away.

In hindsight I should have kept buying. In a way I was the only boogeyman who stopped myself becoming a whole lot wealthier. Don't let the boogey man hold you back!

 

[Shoryuken]

Same story as Rhodes?

I remember many years ago when I saw all those high rise buildings being constructed in Rhodes(stacked right next to each other), I thought to myself these are going to be excess stock/supply of units and will struggle with value. Gosh I was wrong! I wonder if it's going to be a similar story?

 

[Redom]

Sydney went through a decade of building the same number of houses every year. Meanwhile, the population grew by ~ 25% over the decade.

That caused a very serious supply shortage, run up in prices, etc.

Right now if I recall, the demand for new stock is around 180,000 new dwellings. We're building a little over 200,000 a year. These may be national numbers, but Sydney is a big part of the story .

For the first time in decades, Sydney is building more dwellings than demanded! It will take years to make up for the decades of undersupply though.

Will it dampen price growth? Sure - but 15% YoY growth was never going to continue indefinitely.

BISShrapnel have done a lot of granular work on supply of dwellings relative to demand.

 

[see_change]

It will interesting to see what happens .

I'm always puzzled as to why docklands has such a bad rap in Melbourne . We've stayed there and it is so convenient to the center of Melbourne . Prices for a similarly located place in established Sydney suburbs would be much higher .

For that reason it will be interesting to see how green square goes over the next years . It certainly seems to have kicked off ok with the recent OTP sales .

I would have thought it would have been an attractive place given its convenience and hopefully they will have developed the suburb with a nice feel , though that can be hard to judge until it's up .i mentioned green square as a place to look for my 24 year son and he was scathing ...

I'd be wary about units in the wsst , certainly in the medium term if there's any hint of over supply . What sort of price are they selling for OTP in Liverpool?
I'd expect them to drop badly in next downturn if there is oversupply , as I'd expect the same Ian Parramatta .

While I might be overly cautious , I wouldn't be buying in outer areas in boom tims . Those are the places to buy when the market is dead or just staring to move .

Cliff

 

[qonyx_sydney]

I'd be wary about units in the wsst , certainly in the medium term if there's any hint of over supply . What sort of price are they selling for OTP in Liverpool?

Cliff

New 2bed 2bath, 1car are starting from around $460k in liverpool which is about a 30% less than a comparable unit in Wolli Creek start from about $650k

 

[datto]

This boom is different from other booms. We got low interest rates for starters. Prices have been rising for 18 months and are still going up. Let's see where we we are in one year from now. I bet those Liverpool OTP are much dearer.

 

[see_change]

New 2bed 2bath, 1car are starting from around $460k in liverpool which is about a 30% less than a comparable unit in Wolli Creek start from about $650k

How many of those are being built out there .

How much are the older 3 story walk ups selling for now ?

But personally having seen how much those areas come down in between booms I couldn't look at those at this stage

As an investment when I can find something like this within 2 mins I know that I'll be able to find much better investments with a bit more time .

Cliff

 

[tang]

This boom is different from other booms. We got low interest rates for starters. Prices have been rising for 18 months and are still going up. Let's see where we we are in one year from now. I bet those Liverpool OTP are much dearer.

Hey datto and op, wondering what your thoughts are on the credibility of the developers constructing these apartments in Liverpool at the moment?? The influx of construction is crazy at the moment. Prices look OK for units in the area but ? am not sure about post construction costs which will be passed on to to the purchasers.

 

[LeoT]

I got 3 IPs atm, bought n sold others....had 6 including a block of land. Could/should have had 30 by now. The fear factor has slowed me down somewhat. You know the fear of the boogey man jumping out the closet at night ...."aaargghh...you've got too much debt, now I have to eat you". So I had to sell some properties to keep the boogey man away.

In hindsight I should have kept buying. In a way I was the only boogeyman who stopped myself becoming a whole lot wealthier. Don't let the boogey man hold you back!

This is why I haaarp on mindset development. Your right when you say "don't let the boogey man hold you back". But it takes a shift in mindset first for this to happen. And that takes, learning how to change/develop someone mindset. Ive always said, if a 'serious' investor doesn't develop their mindset, then they most likely are not going to gain serious wealth.

 

[Television]

I work within the commercial construction industry and generally, on principle, will not buy any new apartments. I'd rather not buy any built after the 60's-70's.

Residential construction is dominated by cowboys. I wouldn't trust it to not develop major issues.

 

[LeoT]

I work within the commercial construction industry and generally, on principle, will not buy any new apartments. I'd rather not buy any built after the 60's-70's.

Residential construction is dominated by cowboys. I wouldn't trust it to not develop major issues.

some sweeping statements...What type of investments do you think are sound then?

Leo