Sydney’s chronic undersupply of residential housing stock is set to diminish significantly due to a record level of apartments on the drawing board.
According to new research from Knight Frank, the city’s strong capital growth has contributed to the high volume of apartments being added to the pipeline of developments.
Knight Frank's residential research associate director Michelle Ciesielski said that solid population growth in metropolitan Sydney – projected, by the ABS, to be 1.7% per annum out to 2029 – was also driving the new supply pipeline.
Sydney had endured a long period of undersupply, but this was forecast to change significantly due to annual capital growth of 12.15%, she said.
“There are 26,680 apartments currently under construction in metropolitan Sydney… Sydney's North West region dominates the mix with 9,890 apartments, followed by the Sydney CBD and South regions with a combined 8,200 apartments.”
The research shows that:
- At 37.1%, the North West region has the highest volume of apartments under construction. This includes Parramatta (1,640) and - in line with the Urban Activation Precincts - Macquarie Park (600), Sydney Olympic Park (585), Wentworth Park (580) and Epping (524).
- In the South West region, coupled with North, 8,585 apartments (just over 32%) are under construction.
Knight Frank's NSW project marketing director Andrew Drury said Sydney was widely considered to be one of the best cities in the world for quality of life.
This attractiveness coupled with the Federal Government's incentive for foreign investment into the local market, has driven competition among foreign and local developers, as well as investors and owner occupiers, he said.
“But the geographic constraint of being located within a basin, together with a trend towards inner city living, means that higher density around established transport hubs will be required to allow more residential accommodation to be built in Sydney.”
Meanwhile, it is interesting to note that, although some parts of its market are oversupplied, Melbourne currently has only 12,600 apartments under construction. This is despite predicted population growth of 2.6% per annum out to 2029.
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