Approvals for high-density apartments have fallen in Sydney in response to failing confidence in new residential projects
The effect of Sydney's struggling status since late 2017 is beginning to show ass residential construction slows down.
According to ABS data, housing approvals in NSW are lower than those in Victoria, even though NSW has the larger population of the two states.
“The biggest drop has been in high-density apartments where in July 2016 there were 4.361 apartments approved in January 2018 to 2.974,” reports the Urban Taskforce NSW.
“Housing approvals in Victoria are now exceeding those in NSW, with 6.878 approvals in January 2018 compared to 5.410 approvals in NSW.”
This fall primarily centred in Sydney, where confidence in new housing projects is faltering as a result of uncertainty about levies, bank restrictions on loans for housing, and the slow process of obtaining approvals. This could put a damper on attempts to make housing more affordable by increasing supply.
The Urban Taskforce NSW has therefore called for the state government to carefully monitor this situation in order to maintain high levels of housing stock in in-demand locations across the market.
As investors levels go down, Sydney is seeing a resurgence in the activity of owner-occupiers and first home buyers.
“[Housing finance figures suggest that] as investor activity is reducing, the slack is being picked up by owner-occupiers (and anecdotally the first home buyer segment),” says Matthew Lewison, director of OpenCorp.
“Home buyers [have become] more active in the affordable end of the market, which has reduced the median house price in consecutive months.”
The rental market has stabilised as well, according to the Real Estate Institute of NSW (REINSW).
“The vacancy rate has stabilised in February and is favouring those seeking rental accommodation,” says Leanne Pilkington, president of REINSW, in the REINSW Vacancy Rate Survey released in February 2018.
Vacancy rates fell in middle Sydney and the inner city, although those in the outer ring increased slightly. Wollongong also reported a tightened vacancy rate. In the regional market, Orana was a strong performer, with its vacancy rate falling by 0.2% to 2.2%, while areas like Albury, the Northern Rivers and South Coast recorded rises.
SUBURB TO WATCH
THIRROUL: Million-dollar suburb maintains positive trend
The affluent suburb of Thirroul shows no signs of slowing down as both houses and units reported significant price increases in the year to February 2018.
Units recorded a bigger hike than houses did, with values rising by 20.8% compared to 14.6% for houses. The average weekly rent for units also increased at a greater rate (8.7%) than for houses (6.2%).
A seaside suburb 13km north of Wollongong, Thirroul boasts a growing commercial area populated with shops, cafes, pubs and a theatre. It is regarded as the main shopping district for the surrounding suburbs and is a popular holiday spot. The trains passing through Thirroul Station also make travel convenient.
Accessibility: Trains on the South Coast line stop at Thirroul Station
Growth: Unit prices increased by over 20% this year to February 2018.
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