Sydney CBD’s apartment market could run out of stock in less than a year: Colliers
With some 75% of all mooted new stock sold, Sydney’s CBD and surrounding apartment market could exhaust its supply of new apartments in less than a year, according to research by Colliers International.
Owner-occupiers and investors seeking a newly built apartment have the choice of 14 residential projects within the Sydney CBD and surrounding suburbs.
With only one new building being released to the market over the past six months, the 14 buildings are set to provide an additional 2,186 apartments.
Colliers International recently reported that during the past six months about 400 new apartments were sold.
The sales included solid demand for the apartments in The Quay on Quay Street in Haymarket, with 200 of the 270 units sold in quick time.
Despite supply levels expanding considerably in the southern precinct of Sydney’s CBD, Colliers noted 69% of the first two stages of Central Park projects One Central Park and Park Lane project have been sold.
Colliers sees the conversion of strategically located office blocks into apartments as crucial for the CBD advancement.
Ariel Pollard, Colliers International director of research, has studied 22 projects in Sydney and surrounding suburbs, equating to around 4,776 apartments in various stages of the planning system or under development.
Her report shows in past six months since late 2011 about 400 new apartments were sold.
And based on that sales rate the remaining 540 apartments on the market would be sold by mid- 2013, Pollard concluded.
The Hyde by Stockland in the southern precinct is one project that recently completely sold out.
Pollard says the strength of the Sydney CBD and surrounding apartment market is set to continue due to limited supply options and falling interest rates.
Lower interest rates are seen as assisting purchasers – whether they are first-home buyers, upgraders or investors – with achieving entry into the market.
“The time lag associated with site acquisition, approval and construction is considerable, particularly within Sydney due to the numerous impediments associated with the current planning system,” she says.
“This in turn restricts supply levels and leaves the potential purchaser with limited choice.
“An increased population base, smaller household formation rates and limited supply options will ensure long-term capital gain for the astute buyer,” Pollard says.
Buyer demand for apartments priced below $1.5 million across inner Sydney has been described by Colliers International as robust.
Over 2011 a total of 908 apartments – new and established – were sold in inner Sydney, which represented a minor 3% decline on 2010 volumes.
Some 90% of all apartments in the inner-Sydney precinct sold during the 2011 December quarter were under $1.5 million.
Median apartment sales within the inner city ranged from $433,250 in the mid-precinct to $1.1 million in the northern end of the CBD.
Eastern CBD apartments recorded a $710,000 median and $617,500 in the southern precinct. The $500,000 to $600,000 and $1 million-plus price ranges were the most popular, with each recording 21% of the transactions, according to Colliers analysis.
Three of the inner-city regions had higher medians than the total Sydney median unit price, which is around $480,000, according to RP Data.
Sydney’s median fell by 1.8% in the year to April 2012, according to RP Data, with the decline in Sydney unit prices having been modest compared with the likes of Melbourne and Brisbane.
The national downturn was put at 3.1%.
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