As international students return to Australia and our population growth recovers to something resembling pre-pandemic levels over the coming years, new apartment supply remains low with a “perfect storm” brewing.
Mirvac’s head of residential, Stuart Penklis, said back in December 2019 Mirvac could see “the crunch was coming”.
“So, no sign of COVID it would be the first time in twenty-five years that Mirvac didn’t have a crane up on a Sydney apartment project,” he said at the Property Congress.
“By the time we get to 2023-2024 we’re going to have about 45 per cent of the new supply that we had in 2018.
“In the last few weeks, in particular with student population immigration starting to turn back on, we’ve seen a dramatic increase in inquiry for obviously new apartments but also a dramatic drop in vacancy.
“We are certainly, from an apartment perspective, heading into a bit of a perfect storm in terms of a lack of supply,” he said.
Leigh Warner, JLL’s national head of research, compared Australia’s residential apartment supply to a “big ocean liner” claiming it is “hard to turn around” and “hard to get moving”.
“From a supply perspective we saw early stimulus go to owner occupiers and to lure our first home buyers in, it didn’t do much for the apartment market,” he said.
“The apartment market’s still critical to our rental market because it’s a large part of our stock, and not only was there less coming in, but that stock still coming through the pipeline was aimed at owner occupiers because that’s where the demand was.”
Warner said now borders are open, things are filling up quickly.
“On that supply side, for the last six years we’ve had 21,000 apartments a year nationally in those markets,” he said. “[We] will be lucky to get 10,000 for the next four years… this is just going to get worse.”
Jennifer Macquarie, director of Fountaindale Group, said the supply issues spread further than the cities.
“We’ve had the same supply issues as the metropolitan areas, and the planning system has slowed down the ability to deliver new housing,” she said.
“So, if any of you are still considering a sea change or a tree change… you’d have trouble finding a house to live in when you got there.
“There’s a lot of planning to do. And I think state governments are going to need to put some effort into assisting with that.”