Units take over in Sydney

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Multi-unit developments are are becoming more prevalent in middle and outer ring suburbs in metropolitan Sydney, according to new research.

A new report by BIS Shrapnel has revealed that medium and high-density dwellings are not only consolidating their place as the most popular dwelling type in the NSW capital, but are spreading further into the suburban heartlands.

It puts this down to a range of factors, including lack of development sites, affordability constraints, changing dwelling preferences and demographic influences. BIS Shrapnel managing director Robert Mellor believes demand for medium and high-density dwellings has been largely supported by 20 to 34 year old households. Investor demand has also been a key factor in driving development.

"The higher reliance on investor owners for medium and high-density dwellings means demand for new high-density and, to a lesser extent, medium-density dwellings, is influenced by conditions in the rental market, such as the level of vacancy rates, rental growth and capital growth," says Mellor. “In the longer term owner-occupiers are expected to occupy an increasingly larger proportion of these dwellings. Nevertheless, investors remain the key source of demand, and sentiment within this group is expected to improve."

Mellor expects the 20-34 demographic will have the greatest level of occupancy between 2011 and 2015, due to affordability pressures and dwelling preferences, but that it will be closely followed by the 65 and over downsizer market.

The research firm forecasts that, over the next five years, Sydney will see a higher proportion of medium-density approvals in the outer ring suburbs, a similar proportion of high-density approvals, and a lower proportion of detached house approvals overall.


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