Sydney apartment surge continues

Sydney apartment surge continuesSales of high-density off-the-plan apartments in Sydney will continue to grow over the next two years, thanks to low vacancy rates, low interest rates and relatively attractive yields, according to research from BIS Shrapnel.The findings in BIS’s recent report, Apartments in Sydney Suburbs 2014 to 2019, reveal that the strength of Sydney’s apartment market will continue well into 2015-16. After this time, rising interest rates may finally take their toll.The report states that more than $45 billion was borrowed in the 12 months to March 2014 to purchase residential property in NSW”a 76 per cent increase on the 2010-11 figure. High-density building approvals in Sydney reached 20,354 dwellings between March 2013 and March 2014.Further rises in new high-density apartment construction are also expected, with new dwelling approvals forecast to remain at just above 20,000 per annum over the next two years. The local government areas that are forecast to attract the most high-density approvals over the next five years are the City of Sydney, Parramatta, Ryde, Auburn and Ku-ring-Gai Shire. Low interest rates are a key driver behind the momentum for the high-density trend, as is the expectation of further price growth. The report finds that unit prices are forecast to increase by 15 per cent leading up to 2016. Despite the record new apartment supply, BIS says an oversupply of apartments in the market will not emerge; however, vacancy rates will begin to rise and off-the-plan sales will slow in 2016.Other findings in the report reveal investors dominate Sydney’s apartment market, overseas buyers are adding to the demand, and Gen X and Gen Y owner-occupiers are having an increasing presence, particularly in the North Shore, Southern Sydney, and Central Western Sydney.Read the full report from BIS Shrapnel here