Long before any of us had heard of COVID-19, Australia’s largest apartment markets were facing the reality of a looming supply crunch.
Analysis from Urbis, released by the Property Council this week, has found that by 2024 apartment supply is likely to be at crisis levels with construction at only 20 per cent of 2018 numbers.
Over recent months the Property Council has had a strong focus on restoring demand through safely restarting net overseas migration. But it is clear from this research that the pandemic is just one factor contributing to lower apartment demand.
Government actions over many years have led to a reduction in investment that predates the closure of international borders. New taxes and regulations had already put lead in the saddlebags of apartment supply.
The research has found that the supply shortage would see the loss of 30,000 construction jobs across Melbourne, Sydney, Brisbane and Perth in the next few years. This should be a wake-up call for governments.
Sadly, we are not seeing any urgency to address this supply crunch in the state budgets that are currently rolling out across Australia. In Victoria we’ve seen further retrograde steps for apartment supply, with the state government introducing land tax and stamp duty increases and a new “windfall gains tax.”
The Property Council has called on state governments to act now to boost supply, by reducing international investor surcharges, enacting planning system improvements and stamp duty relief. Without action Australians will face significant apartment price and rental increases, particularly when we finally see a normalisation of overseas migration.
In more positive news – congratulations to industry legends Bob Hamilton, Warwick Hemsley, Soheil Abedian and many more, who have all received honours in the Queen’s Birthday Honours List.