Is there a glut of apartments coming for Melbourne and Sydney?

At a recent investment seminar Investment One explained that prices in all the capital cities are now above their previous troughs.

Sydney, in fact, is up 23.1% since its trough according to RP Data statistics.

Yields remain high in Darwin, but have been starting to dip for units in recent months, while of all the capitals Brisbane offers the best yields.

They noted that each city has significantly different growth drivers that affect their cycles:

Sydney: Financial and business services

Melbourne: Goods and services production

Brisbane: Infrastructure and tourism

Adelaide: Manufacturing

Perth: Mining

Hobart: Primary production and ore processing

Regional areas: Agriculture and mining

Chinese investors are expected to keep demand for new apartments in inner city locations strong, and provided sentiment is sustained and rates remain low the market will hold up.

However, despite strong growth and fundamentals in Sydney and Melbourne, Investment One suggested that a glut of apartments may be on the way and growth will not be above trend.

“Within two years, there could be a glut of second hand apartments for rent and also for sale 
in Sydney and Melbourne,” Investment One's Omar Moujalli said in his presentation.

“If population growth slows in Brisbane like it did during the 
GFC, then the Brisbane market could suffer some over supply in 2018," said Moujalli.