An unprecedented apartment boom is reshaping Sydney’s skyline, reinvigorating the construction industry after a decade of under-development that left it struggling. Downsizers, self-managed superannuation fund investors, first-home buyers and offshore investors are buying off-the-plan apartments at record rates.
Sydney’s apartment approvals are, in fact, outpacing houses – there were 2620 apartments approved in October, compared to 1684 homes, according to the Australian Bureau of Statistics. The Reserve Bank of Australia’s policy of keeping interest rates at record lows is stimulating dwelling construction and the impact so far is most obvious in Sydney.
And apartment living could become a nationwide trend if the population reaches 37.6 million by 2050, as is forecast by the Australian Bureau of Statistics.
Cranes dominate Sydney’s inner-western suburbs from Erskineville to Forest Lodge and Chiswick. South Sydney’s industrial areas have been reborn as investment hotspots. And north of the Sydney Harbour Bridge, units in suburbs such as Chatswood and Lane Cove are selling out.
Even traditionally low-rise areas such as the eastern suburb of Randwick will be reinvented to match buyer behaviour, which is dictated by affordability, record-low interest rates and buyers from Asia.
Suburbs offering easy road or public transport access to the CBD are drawing in the developers and evolving into medium- and high-density living areas. Construction growth booming
“We’ve seen 15 to 20 per cent growth [in work] in the last 12 months,” says Peter Maneas, general manager of construction company Ganellan.
His company is building projects for developers such as Australand, Wintern and Defence Housing Australia.
“It will definitely run into the second quarter of 2014,” Maneas says.
“Anyone talking beyond that is looking into a crystal ball; there are too many variables to be able to predict anything beyond then.”
Sydney’s housing market was sluggish for the last decade. Its capital growth lagged other major cities and the market was left severely under-supplied as construction in some years dipped to 50-year lows.
But RP Data senior analyst Cameron Kusher says Sydney’s house prices have risen more than 13 per cent in 2013, year on year, and apartments are up 9.2 per cent.
If city dwellers in Australia suddenly took to apartment living, the all dwellings index could be falling due to the greater number of apartments at a time when the prices of detached homes were rising.
Any expressed market opinion is my own and is not to be taken as financial advice
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